Our Enemy, The State

Javier Milei on criminal politicians, public works boondoggles and the bitter pill of inflation...

(Source: Creative Commons)

“These so-called governments are in reality nothing more than large gangs of thieves and murderers, organized, disciplined and constantly alert.”

~ Lysander Spooner, American anarchist

Joel Bowman, with today’s Note From the End of the World...

It’s fire and brimstone as usual down here in Anarcho-Capitalistan, with another white-hot inflation print to add to the great peso bonfire. 

Predictably, the mainstream mouthbreathers were only too keen to stoke fear and panic among the huddled masses...and, of course, to lay the blame squarely at Javier Milei’s feet...

Argentina’s Milei blasts inflation data, focused on reforms – panted Bloomberg

Argentina's annual inflation soars above 250% in January – crowed AFP

Under Argentina’s New President, Fuel is up 60% and Diaper Prices have Doubled – The New York Times

Yes, dear reader, today it’s infant diapers... tomorrow, adult diapers. Only then will Milei’s personal mission to deprive whining crybabies of hygienic undergarments finally be complete. Victory is nigh!

But wait, what’s this? Digging an inch deep (which is to say, two inches deeper than the toady press headlines), we discover that the rate of inflation actually slowed during Milei’s first full month of presidency, down from 25.5% in December to 20.6% in January. 

But, but, but... however could this be?  

Our Enemy, The State

We’ll come back to that in a moment. First, it’s not everyday you hear a sitting president call The State “the enemy of the people...” “a criminal organization...” in which “a set of politicians band together and decide to use the monopoly of violence to steal the resources of the private sector.” 

You can imagine our delight, therefore, as these very words fell from the Argentine president’s lips when he was interviewed on Italian television earlier this week. Here’s the clip, with subtitles, for all your liberty-loving pleasure...

(H/T @Milei_Explains)

The entire exchange was positively brimming with libertarian easter eggs, like when the interviewer asked Milei if he regretted using the chainsaw in his election campaign (the same campaign that, ahem, got the man elected...)

“No, I’m proud of it,” Milei smiled. “I’m absolutely proud I did that. In fact, I cut the size of the state in half. We are removing corruption from social programs and we are eliminating public works...”

“But in Europe, we do the opposite!” beamed the interviewer. “We increased public works, we increased social projects. And politicians get elected because... they talk about the public spending progress. Do you know this?”

“Yes,” replied Milei. “And let me ask you something. Which area of the world is growing the least?”

“Europe?” an unlucky guess. 

“Obviously,” shrugged Milei. “Because it has plenty of state presence. Oh, and too many Keynsians.”

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Pumas and Pigeons

Our gentle reader can only guess how such brazen rhetoric might set the puma amongst the pigeons. Is it any wonder entrenched politicians and their bootlicking bullhorns in the press corps wish to disparage the man as a “far-right” lunatic? And here he is, pointing at the naked emperor and crying “fatty!” at the top of his lungs. 

A victory for freedom, for liberty, for individual responsibility, for the people...

...spells the end of the collectivist parasites’ livelihoods. 

Which brings us back to the manner in which the press “frames” the narrative down here at the End of the World. 

A couple of points, on the topic of Argentina’s world beating inflation...

Firstly, the 254% figure is the year-over-year reading... a measure that, necessarily, includes eleven months of currency conflagration doused and lit by the previous print-and-pilfer Perónist administration. The former government, to the surprise of none, made sure to crank up the presses immediately before departing office, leaving a raging peso inferno for the new president (and Argentine citizens) to inherit. It takes a lot to turn a great hulking ship around, in other words, even when you’ve thrown half the State’s dead weight overboard. Even so, early indications are that the course is, indeed, correcting. 

Consider the projected inflation both before (green line) and after Milei’s election in late November last year...

Some economists, such as Portfolio Personal Inversiones (PPI), are projecting even better results for February...

When The Fix Is In

Second, the January print also includes consumer price increases that resulted from the removal of government-enforced price controls. Ranging from artificial energy and travel subsidies to “precios cuidados” at the store, such market distortions simultaneously cost the government vast sums of money (which it didn’t have... and therefore felt obliged to borrow and print) while sending a clear and unequivocal message to entrepreneurs in the private sector: 

Don’t enter the market. Don’t compete. There are no profits to be made. Take your business elsewhere.

The result, predictable to anyone who has ever managed so much as a lemonade stand, was severe shortages of goods and services on the supply side and gaping budget deficits for the flailing state. It’s all well and good to have half price diapers, for example, but if companies are not willing to produce them at beneath cost, it won’t be long before you end up with a real mess on your hands. 

Moreover, given that in a complex, dynamic economy, the price-bone is connected to the profit-bone, the profit-bone is connected to the labor-bone, which is in turn connected to the raw material-bone etc., the effect of freezing even a handful of “necessary” prices tends eventually to impact and infect all other parts of the body economic. Think of rigid controls as a malignant tumor; the deleterious spread of corrupted information throughout the system as a kind of metastasis. Pretty soon, the whole economy is riddled with cancer.

Which is exactly what happened here in Argentina... and every other centrally planned utopia from Soviet Russia to Cuba to Venezuela and the rest. As Henry Hazlitt patiently explained in a speech titled, appropriately enough, The Dangers of Price Controls: 

In a free economy prices are constantly changing. They are changing to reflect changes in supply and demand, in costs, and in a hundred other conditions. Some prices are going up, other prices are going down. If an effort is made to freeze these prices and wages and costs exactly where they are, it immediately disturbs the relationship of prices and comparative profit margins which decides what things will be made and what quantities they will be made in. It upsets the process by which the free market decides how thousands of different commodities and services are to be made in the proportions in which people want them.

A Bitter Pill

Certainly, it is difficult to wake up in the morning and realize that penny rides on the unicorn express and gas bills denominated in nickels and dimes are not part of any real world, adult reality. Someone, somewhere, is paying for the pixiedust gap between fact and fantasy. (A cost that is typically passed on, from political insiders... to lumpen outsiders.) 

As Milei explained during his inauguration speech, with uncharacteristic candor for a so-called “populist” president, inflation is the “last bitter pill to swallow” for Argentine citizens. 

It is also arguably the most immediate threat to the wellbeing of millions of middle- and working-class people, which is why Milei’s detractors would love nothing more than for him to fail in his stated mission to dollarize the economy and rid the nation of the specter of Zimbabwe-style hyperinflation. 

Of course, one month does not a trend make...and the profiteers of fear and misery are fierce and determined to see him fail. 

As for the price of dirty nappies, we are reminded of the old adage (often attributed to Mark Twain): 

“Politicians are a lot like diapers. They should be changed frequently, and for the same reasons.”

Stay tuned for more Notes From the End of the World...

Cheers,

Joel Bowman

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