I.am.not.making.this.up💥: Javier and Donald

Javier Milei and Donald Trump are repellant, but what does their success tell us?

According to the New Yorker, Javier Milei, the president of Argentina, once described the government thus: “The state is the pedophile in the kindergarten, with the children chained up and slathered in Vaseline.” I mean, hell, Javier, please, don’t mince your words. Tell us what you really think.

US President-elect Donald Trump, in his previous term and in the election campaign, described Washington as “the swamp” that needs draining, which is an old description, because geographically, Washington is a bit swampy - ask anyone there in the height of summer.

But what is unusual about his description of state institutions is all the bile: he called the FBI "vicious monsters" and "enemies of the people" after they executed a search warrant at his Mar-a-Lago residence in 2022. The Justice Department is "corrupt" and a "kangaroo court,". Federal workers are "lazy" and the bureaucracy "bloated." Etc, etc.

Given their abhorrence of the very institution they are running or will be running, it's understandable that Trump and Milei are considered loosely in the same camp. And that’s somewhat born out by their actions: Milei was the first foreign leader to visit the President-elect after his victory.

Yet, it's easy to get caught up in comparisons, especially if you are repelled by their respective personalities. And comparing them has become something of a media standard over the past few weeks. I think the polls of this discussion were established in two articles I’ve attached below. The pro argument about Milei is put, as you might expect, by the Economist, and the anti argument is put, as you might expect, by The New Yorker.

Both are behind paywalls, so just to summarise, the Economist argues that after a year in power, Milei is demonstrating some success. His “resolve has guided a blast of reforms aimed at shaking Argentina out of decades of humiliating decline caused by rampant inflation, absurd handouts and thickets of regulation. The result has been better than almost anyone expected: inflation is down sharply, and government spending is almost 30% lower in real terms.

The successes could still be reversed, but “fortified by the clarity of his convictions and immersed in free-market theory Milei has a better chance than those who came before him,” the Economist editorialises.

The New Yorker article focuses on the consequences of his policies for the poor. Much of the education sector has been gutted, for example, it says. Milei cut inflation adjustments for universities, leaving many campuses unable to pay for lights and heat. “A dozen ministries have been dissolved or downgraded and defunded. The department of public works has been frozen; an estimated two hundred thousand construction workers have since been fired, leaving behind half-finished buildings. There have been radical cuts in aid to impoverished children. While inflation has declined to less than three per cent, the poverty rate has grown roughly eleven points, to fifty-three per cent,” it concludes.

The person who knows most about Argentina in South Africa, I suspect, is former ambassador and former DA leader Tony Leon, who makes the point that although Milei and Trump are often compared, the comparison has its limits. “Unlike Trump, he does have a joined-up philosophy; it all hangs together”. And unlike Trump, he is a very serious thinker.

Leon says the shorthand of what happened in Argentina is that the gift of the originator of the term Peronism, former President Juan Perón, found a way to unite a very divided society in what he described as a “gaseous mishmash” of mixed policies. It was the ultimate in “big tent” politics.

Perón actually expressed this notion just before taking power for the second time saying, Argentines are very different people “but in the end, we are all Peronists”.

And in a sense, this remained true … until Melei. There have been several technically non-Peronist governments in Argentina over the years, but none of them have been able to shake the country out of its inflationary spiral.

But the dead hand of the state eventually led to an unprecedented level of frustration and that, combined with a mastery of social media, propelled the “unstable” free market economist boasting a hairstyle that is a cross between Elvis and Wolverine, into office. Milei is also often compared to Margaret Thatcher, but Leon points out that he is much more radical; by comparison, Thatcher was a cautious incrementalist.

It's easy to take the comparison between Trump and Milei too far, but it's also easy to ignore the similarities. The big difference, as the Economist points out, is that Milei believes in free trade, and while in power, he has modified his view quite dramatically. While campaigning in 2023 he repeatedly insulted China, pondering whether it was right to “trade with an assassin”.

Now, China is described as “a fabulous partner,” after having recently met China’s President Xi Jinping. “They don’t ask anything. They want to trade calmly.”

Alejo Czerwonko, UBS AG’s chief investment officer for America's emerging markets, said “People make a lazy analogy with Milei and Trump. On the surface they may have similarities. But in reality, under the hood, the specifics each of them propose are diametrically opposed.”

As Milei hacks away at Argentina’s fiscal deficit, Trump’s proposals — including tax cuts — are expected to boost the US federal deficit by $3 trillion over 10 years, according to an October analysis by the Tax Foundation. “Trump is naturally and ideologically protectionist,” Ades said. “Milei isn’t.”

But their overlap is also striking. Trump has established a Department of Government Efficiency headed by, ironically, two people - biotech company founder Vivek Ramaswamy and entrepreneur Elon Musk, who are mandated to reduce government spending.

I have a theory about what lies behind this: Covid. For several reasons.

First, Covid justified huge increases in government expenditure all over the world. There was a time when it was considered very ill-advised for a government to spend more than 3% of what was brought in. The entire EU “stability pact” introduced in 1997 was premised on the idea that government deficit should remain below 3% and that debt should be below 60% of GDP. You couldn’t even join the EU if you breached these rules.

Those rules were tossed out the window during Covid and deficits remain huge. France's budget deficit increased to 5.5% of GDP in 2023: the average in the EU is 3.6%. In the US, it was 7.07% in 2023. India’s deficit is 4.9% of GDP, roughly the same as SA. As a result, government debt around the world is getting out of hand.

Are people aware of this? I think they are because one thing debt does is decrease effective government spending since more government income gets siphoned off to pay the interest payments on the debt. They might not worry specifically about the global fiscal deficit, but they notice when their local post office closes.

Second, at the time when the pandemic was actually life-threatening, it seemed sensible for governments to order us all indoors and close the schools. But now that the threat of getting a disease has disappeared, it seems crazy that they were able to do that. The power of the state, even in democratic societies, became writ large.

With hindsight, it is easy to remember some weird stuff. Did the government really say we were not allowed to smoke? In some retail guidelines, open-toe shoes were discouraged for workers in specific settings, but not boots with short pants (I mean…). Early in the pandemic, the sale of rotisserie chickens was banned in supermarkets.

With all this hovering in the background, the writings of Friedrich August von Hayek, suddenly seem very apposite again. In The Road to Serfdom published in 1944 Hayek wrote, “Emergencies have always been the pretext on which the safeguards of individual liberty have been eroded.” And in The Constitution of Liberty, he wrote: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Don’t those quotes make much more sense now, after Covid?

I asked Leon Louw, the co-founder of SA's most libertarian organisation, The Free Market Foundation, what he made of Milei, and he said the Argentinian leader reminded him of US president Ronald Reagan, “doing something bizarre”.

“He managed to create the impression that he wasn’t the government, but out there with the public against the government .. which was him!” “Milei is Reagan on steroids”.

The US Department of Government Efficiency (DOGE) could be wonderful, or a nightmare. "I think Milei would have created a Department that gets other Departments to do as the term implies, to Depart. Why are they called “departments” when one thing they never do is depart!?"

"That his message is reaching beyond Argentina is significant. No one has encountered this before. It’s a world first, I think".

What both Milei and Trump have demonstrated - and this is really new - is that it's possible to win electoral support on these ideas. Global concern about budget deficits and overweening government power is an undercurrent and by no means certain. There are contrary indications, of course.

But surveys do show trust in government is declining, and, you know, I sense there is something of a noticeable global trend going on here. NMTU

From the department of too much ... you know

How is your brain rot today?

I wrote last time about the word of the year, and at that point, perhaps the most influential global dictionary, the Oxford Dictionary, had not made up its mind. Now it has, and it has declared for "brain rot", essentially what happens to your brain if you read too many blogs (sorry!) and are on social media too much.

But then The Guardian launched a quiz to see if you have brain rot or not. Which introduces an interesting question: shouldn't you try and answer the questions wrong? I mean, is "brain rot" something you want? plan to brag about? I don't think so. So please do take the quiz, and here is hoping you score is zero.

From the department of modestly good ideas

Google has released a new online chess game called GenChess where you design the pieces with AI and then play with those pieces. the effort is intended to highlight Google's role as main event sponsor of the 2024 World Chess Championships, currently taking place in Singapore.

This is my set inspired by artic animals - kinda cute. But does changing the design of the pieces actually help your chess playing ability? I suspect, umm, so much.