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Daniel Mulhall is a consultant with DLA Piper law firm and, prior to that, he was ambassador of Ireland to Malaysia, Germany, the United Kingdom and the United States.
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I want to talk about a couple of fellas that I’m really not so sure of.
It’s hard to overstate how disappointing the last century has been for Argentina. I think it was David McWilliams who said on his podcast that if you were emigrating from Ireland 100 years ago, and your choice was to go around the world to Australia, north to Canada or south to Argentina, based on economic potential, Argentina would have been the obvious choice. Of the three, Argentina came first in population, in GDP and in per capita income.
Argentina had a much better climate, huge natural resources, and a seemingly never-ending market in Europe for its seemingly never-ending supply of beef produced by its vast area of grasslands, once refrigerated shipping had become a possibility.
Not many Irish took that route, perhaps because of language differences, but there can be no doubt that those who did bet on the wrong horse, or maybe cow. The Wikipedia article on the Economic history of Argentina says
By 1913, Argentina was among the world’s ten wealthiest states per capita. Beginning in the 1930s, the Argentine economy deteriorated notably.
I think that’s putting it kindly. Argentina is now ranked at number 72 globally for GDP per capita. Canada is in the fourteenth slot, and Australia is at number 11.
Argentina holds the world record for the number of IMF interventions; 21 since they joined the International Monetary Fund in 1952, no kidding. We’re still smarting over our disgrace 15 years later, quite rightly, but for two generations, Argentina has had an average of one IMF intervention every three and a half years; in fact of the 94 countries in hock to the IMF, Argentina accounts for almost a third of the total debt.
But most countries on that IMF list were always poor, at least in modernity. The real kick in the teeth for the long-suffering Argentinians is that used to be rich. It’s a bitter irony that its name is literally about how rich it was. I could go into great detail about the reasons for Argentina’s decline; I have spoken recently about how close the correlation is between democracy and wealth, as well as every other positive index, but I don’t have the space for that here, I’ll just quote Wikipedia again:
The single most important factor in [Argentina’s] decline has been political instability since 1930 when a military junta took power, ending seven decades of civilian constitutional government.
Then came one of the fellas that I’m not so sure about.
On 10 December 2023, Javier Milei was elected president of Argentina. It’s important to note that his party, La Libertad Avanza, was not a large political force. Even now, they only hold 16 per cent of the seats in parliament. The party is variously described as far-right, ultraconservative or libertarian, and it’s hard to tell, but I think that does not describe Milei adequately.
In case you haven’t heard of him, his style is ah unique, to say the least, and I’m not just talking about his hair. He must have been an Eminem fan in the noughties, he campaigned holding a chainsaw that he revved up in front of crowds to symbolise what he intended to do to public spending.
All this I can source online, but after that it gets difficult. Things are so chaotic in Argentina that it’s easy to manipulate start and end-dates to make figures sound either very good or very bad. So many people are determined to paint him in either a good or bad light, that it’s hard to work out the truth, and trying to research Milei’s job performance feels like …
Argentina’s inflation rate, as reported by Reuters, now has a rate of about three per cent [yaaa] three per month, which works out to about 45 per cent per year, but that’s down from a rate of over 1,500 per cent, but that rate was when Milei was first in office [awww] but in the years before he took office, the rate was between 100 and 200 per cent, so getting it under 50 per cent is still an achievement [yaaa], or maybe it’s not because Milei cut public spending by 31 per cent, taking a massive amount of money out of the economy which of course flattens the inflation rate, because nobody has any money to buy anything.
There’s a story in Reason magazine – and I want to preface this by saying that this is not a neutral source, it’s very much a libertarian publication, and they are really fanboys for the sort of economics Milei promotes, but to be fair, their reporting is usually factual. The Media Bias Fact Check website rates them as ideological, but highly credible.
Reason magazine’s story says that Milei swept away rent controls on private residences, along with most other non-financial regulation on residential letting. This caused some rents to shoot up, not surprisingly. But Reason reports, it also caused a huge influx of new supply into the market, which they say has caused real rents, that’s to say adjusted for very substantial inflation, it caused real rents to go down.
This, they say, is evidence of the free market working. The previous laws had been keeping a lot of supply out of the market, because rent controls were set in pesos, rent could only be adjusted at set periods, and in line with the official inflation rate, which didn’t reflect a currency and economy in freefall.
Again, I want to put a big health warning beside this story, it seems like they are using data from just one listings website to judge both the supply and rental prices, but I think that with hundreds of thousands of vacant properties in the midst of a housing crisis, we don’t have to look too far to realise that regulation can have a big impact on supply.
But what about the other fella?
He’s Nayib Bukele, the president of El Salvador. Like Milei, he also comes from a minor party, and even more than Milei, his radical policies have made him wildly more popular than his party.
El Salvador, has its share of economic problems, but it’s real issue is crime, and whatever you think of them, there is no ambiguity about the success of his policies, and the voters certainly agree. Bukele won with 53 per cent of the vote in 2019, and was re-elected a year ago with 85 per cent of the vote – he got 13 times more votes than his nearest rival.
With about the same population as Ireland, El Salvador had 6,656 murders in 2015. El Salvador had 200 times more murders than Ireland. You heard that right, 200 times more. Ireland has about one murder every 10 days, El Salvador had 20 murders every day, the large majority of them associated with the country’s huge and powerful criminal gangs, notably the notorious MS13.
Bukele basically sent in the military to defeat the gangs, and has rounded them up into newly-built maximum security prisons.
In March 2022 Bukele started the régimen de excepción, basically emergency powers which suspended many constitutional rights along with making a series of criminal reforms, making conviction and imprisonment easier and harsher. It was supposed to last for 30 days, but it is still in force and has been extended 28 times. On its own terms, it’s working. The murder rate is down 98 per cent.
The effect of this cannot be underestimated. It seems to have brought El Salvador from being one of the most dangerous countries in the world, to being close to par with many western countries.
But, even without talking about the human rights issues here, it might not be all that good. The murder rate peaked in 2015, seven years before Bukele’s régimen de excepción, when the gangs essentially negotiated a nonaggression pact between themselves, followed by a more comprehensive peace pact in 2019.
And the figures don’t include killings by police, which have shot up, there have been about 150 since the start of the régimen de excepción, plus maybe 100 murders in prisons, [awww] where so many gang members now are. It’s hard to tell, but gang members may also have started a policy of hiding the bodies of victims, to avoid police attention, where before they would often display victims’ bodies prominently, to create fear in the population.
But here’s the thing. Taking all that into account, you could say that Bukele has cut the murder rate not by 98 per cent… but only by 90 per cent.
And if you question either his methods or achievements, or those of Milei in Argentina, you have to do that in the context of the situation.
You may say that Milei, in his efforts to reform the economy could end up burning the house down. The problem is that he simply can’t do that, because the Argentinian economy was already a burnt-out, smoking wreck when he arrived.
And the human rights violations in El Salvador are real and serious, but Salvadoreans were not choosing between rights violations and no rights violations; they were choosing which rights violations, and even the post-gang truce murder levels, 120 murders a month or so was horrendous, and of course they are tip of the iceberg of the vast criminality that Salvadoreans had to endure every day.
Of course, the reason these two outsiders were elected was because of the horrendous state of their countries.
So what’s to learn? One, criticise them, for sure, but Two do that in the context of the situation they are trying to handle, and Three most of all thank the stars that we have the luxury of not having to choose which of our rights should be violated.
