Below are some paragraphs included in the messy, although already famous, Decree of Necessity and Urgency that Javier Milei sanctioned as soon as he took office and which, in fact, would allow him to repeal laws and eliminate regulations that prevent “the normal development of the economy”.
It is understood: measures that prevent what the President considers normal economic development, without interference or regulations, not even those which in developed countries and economies serve to balance “market forces” or Don’t leave everything to power relations.
Already at the beginning, dramatically, the team says that Argentina must face “an emergency never seen in the history of the country, with the certain possibility of an acceleration of inflation to 15,000% per year”. Today, he adds, inflation would fluctuate “between 20 and 40% monthly for the months between December and February”.
A surprising and recurring fact is that many of the arguments used to try to impose strong decisions under the protection of the DNU They come up against complex and very unequal social frameworksfor which critical shock specialists recommend remedies that are not as drastic or more elaborate than those proposed by libertarians.
This is famously the case with the 118% drop that the government initially imposed on the official dollar and which led to a general and accelerated price correctionstarting with food, which is already nullifying the advantages deriving from the movement of the exchange rate.
Several decisions that preceded or accompanied the DNU sent the first inflation projections of the Casa Rosada, such as that of 20% for December, into the bin. Most consultancy firms that follow prices on a weekly basis speak of around 30% of the general index, with an addition that is not at all stimulating: the increase in the cost of food would exceed 30%.
Sharp increase in food
It’s clear: we’re talking about 30% or more than 30% in a single month. And even more: if it were the let’s say moderate 27% estimated by a study conducted by former officials, we would have that between the beginning of January and the end of December the cost of food would have increased by as much as 247%.
It started to rain on this mined territory relentless adjustments, like the 27% of fuels which, together with previous increases, brought the level to 85-90% in just thirty days and, in the same act, shook the cost of transporting goods and the prices of key production factors . That is, essential goods and services for the most diverse social segments.
Seen from a different point, different from the one that justifies this and other increases, it makes sense to insert here a paragraph from the DNU that talks about real salaries “around 300 dollars”, at the end of the Kirchnerist cycle. And finish with what was left “six times below the level existing during convertibility.”
You can also get, without too much effort, to the point that refers to “over 20 million Argentines who do not have a dignified life because they are prisoners of a system that only generates more poverty”. And while we’re at it, let’s add to the train, among others, the 45-52% increases in bus fare and the monthly indexation that will accompany the measure and the 56% in the subway.
Inflation of 30% in December, plus another, say, 25% in January would give about 60% in a single two months. A strong and threatening signal, that is, if the government is unable to stop either the indexation or the inflationary inertia that has marked the economy in recent years.
Good Milei style, official history rules hammer out the errors and failures of politics, that is, from previous efforts. And from there they launch slogans from the libertarian repertoire such as “increasing the competitiveness of the healthcare system” and freeing up the prices of prepaid medicines.
This varied and at the same time dispersive repertoire includes “the elimination of state aid and the energy control structure”, little less than free tariffs or, if one prefers, the opening to increases which in some segments of consumers they could reach up to around 400% for natural gas and 200% for electricity.
Clearly, the scythe will continue to advance on energy subsidies. According to a report from the Congressional Budget Office, between January and November 2023 the allocation intended for this purpose was cut by 28.4% in real terms, almost a third net of inflation, compared to the same period in 2022. For now and for the future Not much longer the share is $2.3 billion.
Another thing that is coming and coming quickly is the removal of transport subsidies, for both buses and trains, which, unlike the rest, grew by 11.9% in real terms last year. Today it is just over 800,000 million dollars.
At the bottom of the ranking, the big losers of the battle and of all the battles against inflation, who also fight alone, are pensioners: measured on the basis of public spending, the real loss in 2023 was 4.4%. Which seems like little but it’s not that little if we clarify that the real loss in 2023 was 4.4%. Which seems like little but it’s not that little if we clarify that the real loss in 2023 was 4.4%. It seems like little, but it’s not that little if we clarify that we’re talking about the minimum plus bonds that aim to offset the impact of inflation and never compensate for anything.
In this context, Milei’s DNU insists that it is urgent “an adjustment of public accounts and finances that implies a drastic change in the course of the economy”. Its goal is to reach December 2024 with zero deficit and, if possible, with a slight surplus. It’s about striking close to 10 billion pesos in a few months.
For now, what is obvious is that the adjustment falls heavily on the middle class and the lower middle class, which is to say that it also hits the very low-income social strata hard. Simple: much of the performance of these sectors depends on the situation of those who can bring them work or, better yet, jobs.
Looking more closely, some analysts focus on the problem the outskirts of Buenos Aires and, above all, in the populous Third and First sections. That is, among other parties, in La Matanza, Lomas de Zamora and Florencio Varela; in San Isidro, San Martín and Morón.
Returning to that double tone of the DNU which applies both to talking about a catastrophic legacy and to saying that there are no further adjustments, we have that “6 million minors suffer from hunger and cannot even attend school regularly”.
It is clear that if the decree goes through a difficult moment, as it does, it is because it clashes with power factors that really weigh. It is not due to the pressure of pensioners or that of the middle or lower class, at least not for now.
Source: Clarin
