Proof that far-right austerity is economic terrorism
In Argentina, a Trump-loving leader turns theory into pain
Welcome to a Sunday evening edition of Progress Report.
We’re living in an era of unparalleled economic inequality in the United States, the result of 40 years of scammy trickle down economics, periodic austerity, and special interests’ stranglehold on public policy. The GOP owns much of the blame for the destructive policies and paradigm shift over the years, yet it has largely avoided public comeuppance thanks to the frequency with which the party sheds its skin.
In fact, it’s pseudo-populist, right-wing servants of the billionaire elite who are often best able to use the class outrage that has coursed through the nation since at least 2008. This reached its zenith with a Trump-Vance campaign built on cynical working class appeal and financed by anti-government ideologues. Their playbook recalls that of Argentina President Javier Milei, a hardcore libertarian and Trump ally who ran as a populist and is now implementing an economic regime of austerity and privatization.
Tonight, my friend Thomas Kennedy, a political organizer and former DNC member who was born in Argentina and frequently returns, breaks down what’s happening under Milei and the devastation that his policies have inflicted. In doing so, he debunks the false narratives global financial media and offers a terrifying preview of what could happen in the United States under the rising pseudo-populist right.
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Argentina proves far-right austerity is economic terrorism
by Thomas Kennedy
Supporters of Argentinean President Javier Milei are hard at work trying to convince the public that things are finally looking up for the country, and at first glance, the numbers seem to offer a glimmer of hope: economic activity in the country has risen by 1.3% since April and is up 2.3% when compared to a year ago. This can feel a bit like whiplash for those who remember headlines from May that claimed that that economic activity had fallen by 8.4% in March, the biggest drop since 2020. So what gives?
Argentina has a problem of unbalanced growth. The country imports more than it exports, which it does by borrowing money from foreign investors to cover the difference. The same dynamic happens with government spending, with outlays that exceed tax revenue forcing the government to borrow to make up that difference as well. To facilitate access to imports, Argentina’s government artificially inflates the value of the peso by spending dollars and other foreign currencies, which is a double-edged sword as it makes exports less competitive.
Milei has tried to correct this unbalanced growth by introducing harsh austerity measures that drastically cut government spending as well as devaluing the peso by fifty percent, restraining Argentineans’ ability to buy imports while improving the position of exports. The government is also attempting to pair up its two currency regimes, cutting the unofficial black market exchange rate to match it with the official one, with the hopes that this will calm the nerves of investors reluctant to do business in Argentina.
These exercises in extremist economic theory have thus far only caused pain and suffering in Argentina, where the standard of living is down and financial distress is skyrocketing.
The decision by Milei’s government to push the export of popular cuts of meat, for example, has predictably made it harder for the average person to purchase them in a country known for its meat production. People are sinking into poverty; incomes have fallen 14% over the past six months, according to the University of Buenos Aires' RA Center at the School of Economics, which has sunk 35% of people with full-time jobs below the poverty line.
Things are so dire in the country that in a recent survey, 72% said that they were worse off under Milei and 55% are using their savings just to make it to the end of the month.
Anyone with a basic understanding of economics knew that this would happen. To put it simply, Milei has accomplished the lowering of month-to-month inflation by effectively starving Argentineans of cash and triggering a recession that has slowed down economic activity. If people don’t have money to spend, prices will artificially calm down as panicked businesses attempt to attract cash-strapped consumers back into stores. These austerity measures were undertaken as Milei promised a “V” shaped economic recovery that has not so far manifested.
Misleading math creates the illusion of growth
The economic growth being touted in headlines by outlets like Bloomberg is almost singularly a product of the agriculture sector, which is recovering from a heavy drought that devastated crops last year. And not even farmers are happy with Milei, who has thus far failed to deliver on his promises to them, as well.
Take away the agricultural sector and other major industries like construction, manufacturing, and retail sales are still declining. Complicating things further, the peso’s unofficial rate continues to devalue faster than the official rate, underscoring the precarity of Argentina’s economy; raising interest rates to stop this trend, as they did in the US, is off the table as it will almost certainly push the economy deeper into recession.
The austerity measures that have devastated pensions and wages are leaving people like my grandmother and aunt increasingly dependent on remittances to make ends meet. More than 3550 companies have closed during Milei’s tenure, and in January, the overall poverty rate had risen from 45% to 57%, the highest level in 20 years. At that time, 70% of children were living in poverty.
All told, 27 million Argentinians now live below the poverty line, and 15% of the population is considered destitute. Things are so dire that videos of rotting produce being thrown away due to people not having money to purchase them are going viral.
The backdrop to all of this is an increasingly disengaged Milei, who spends his time traveling abroad to appear in far-right rallies. In just the past month, he appeared at CPAC, where he met Trump and received a ridiculous medal from Bolsonaro that was emblazoned with his face. He also managed to start a diplomatic dispute with Spain by speaking at a rally organized by the far-right VOX party and baselessly accusing Prime Minister Pedro Sanchez of corruption.
Meanwhile, Milei’s government continues with the elusive promises of economic recovery that seem to be always within grasp but never actually achieved. They are aided in this by a network of right-wing social media influencers and partisan outlets, who will report in misleading ways statistics like the recent increase in economic growth without the proper context of what is driving that growth and how it is truly impacting the quality of life of Argentinians.
It’s only made worse by supposedly nonpartisan institutions like the International Monetary Fund, which has acknowledged that Argentina’s GDP will drop 3.5% this year but also promises that it will magically rebound by 5% in 2025 and supports Milei’s so-called reforms.
None of this can hide that Milei’s reckless policies so far have not delivered on his promises and have resulted in misery and pain for most Argentineans.
Thomas Kennedy is a writer and former Democratic National Committee member from Argentina. He has worked with organizations like the Florida Immigrant Coalition and The Immigration Hub, and as an aide in the Florida legislature. He is on X and Threads at @tomaskenn. He is also the co-host of the Why Are We Like This podcast (on which I frequently appear).
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