"The Tale of Mr. Scrap Metal"
by Joel Bowman
“The years teach much which the days never know.”
~ Ralph Waldo Emerson, from his essay "Experience" (1844)
Buenos Aires, Argentina - “After all these years, I am still amazed by the minds of men. I wish, just for one moment, that I too could think of absolutely nothing.” At 92-years young, Ana is wise beyond her years. She and her husband, Luis (who will celebrate his 94th lap around the sun next week) called in for coffee and cookies yesterday. Apparently unaware that “gender is a social construct,” Ana explicated freely on the differences between the sexes.
“I sometimes ask Luis what he’s thinking and do you what he says to me? ‘Oh, nothing dear.’ How I would love to experience such peace of mind! Alas, it’s not for us. We women are different,” she nodded knowingly to our own dear wife. “We can’t just ‘switch off’ like men can. Our brains are wired differently. We always have a million things going on. Now, whether or not all these thoughts are important, I am not at liberty to say...”
Knowing better than to take that bait, Luis turned instead to his favorite subject, his beloved Argentina, leaving the fairer sex to their busy minds.
The Tale of Mr. Scrap Metal: “I see that you’re following along with our great experiment here,” he began, making no attempt to hide the excitement in his eyes. “I have great hope for the future. And it grows everyday. Did you see the latest story in the newspapers, about Don Chatarrín?” We confessed we had not and that, in any case, we would prefer to hear it from our dear friend instead.
“That’s the nickname Milei gave to the country’s biggest steel tycoon, Paolo Rocca. It means ‘Mister Scrap Metal.’ I could hardly believe it when I read it, but this president is a different kind of man. He’s not really a politician, you know. But I’ll get to that...
This Señor Rocca, ‘Mister Scrap Metal,’ is the head of Techint, a large multinational based here in Argentina. They began when I was still in my twenties, beginning my career as an engineer. They won their first big contract to build an oil pipeline down in Patagonia, in Comodoro Rivadavia. That was back in forty-nine, I recall, not long after Peron came to power...
That was a different time, you must realize,” Luis continued. “Perón was a nationalist and a socialist, as you know, and in the very worst ways. His big three ideas, las tres banderas [the three flags], as he called them, were ‘political sovereignty,’ ‘economic independence’ and ‘social justice.’ A lot of his ideas he borrowed from his hero, Mussolini. People talk about these ideas today as though they are something new, as if Peron and men of his sort had not spent the past eighty years discrediting them, but that’s another issue...
Perón was a very charismatic man and a highly skilled orator, two characteristics that are very dangerous when found in a politician. He could charm a crowd into believing the most absurd things imaginable. And so he did. Regarding his so-called ‘economic independence,’ Peron promoted the idea of ‘import substitution industrialization,’ which sounds marvelous, provided one has no idea of how an economy actually works..."
Argentina First (to Last): “The basic premise – clear, simple... and wrong – was that Argentina could reduce its ‘dependency’ on foreign nations by manufacturing here at home what it had previously imported from abroad, even if it had to do so at higher cost to the consumer, which was almost always the case. Naturally, people don’t want to pay more for inferior goods, so the government would have to do what it does best: force them to do so... all in their own interest, of course, and in service of the ‘common good.’ So Perón levied tariffs and imposed strict quotas on imports, making them less competitive domestically. Thus, according to the big man’s ‘thinking,’ would home-grown industry be protected from the predations of evil foreign powers, who were really just our trading partners. In the meantime, our local manufacturers would be given ‘room to grow and flourish,’ delivering us a bounty of ‘Argentine First’ products. So went the idea, anyway...
The result was so predictable, so obvious, that almost nobody saw it coming. Far from delivering quality products for cheaper prices, local producers took advantage of the protections and raised prices to just below that of the artificially inflated prices imposed on imported goods. Meanwhile, free from outside competition and enjoying a captive market at home, our once-proud industry grew slack and lazy, such that the quality of our goods declined to the miserable state we find them in today. Innovation stalled. The much anticipated economic boom never materialized. Quite the reverse. Indeed, many of the companies that managed to survive at all did so because of tariff protections, not because they built better products. And so, Argentines who had happily marched along behind Perón’s fantastical ideas suddenly found their cost of living skyrocketing, while their store shelves were either stocked with products of embarrassingly poor quality, or left altogether empty. And that’s just for starters...
Luis shook his head, as though baffled even now by how such a cruel fate came to pass...“It was apparent even from the beginning that this was not going to work,” he went on, “at least not the way Perón had intended. For one thing, local industry still needed to import goods. Machinery, tools, spare parts, industrial inputs of various kinds and so on. Now these were suddenly much more expensive, a cost that was duly passed on to the customer. As local industry lagged, the state involved itself ever more, spending enormous sums to subsidize and prop up domestic production. Since our exports could not keep pace, and dollars were scarce as a result, the state took to printing money to cover its ever expanding expenses. The expanding monetary base meant wage-price spirals and persistent fiscal deficits. The government naturally responded to this disaster by turning it into a catastrophe, enacting currency controls and printing even more local currency. That’s when inflation, which had been a cyclical inconvenience, like a seasonal cold, turned into a chronic illness. Then came the most renewable resource in all of Argentina’s politics: corruption..."
Indian Giving: “With practically all power in the country now centralized unto the state, the economy became less about which businesses produced the most valuable goods and services and all about which industry was the most politically connected. Lucrative contracts were awarded not to the best companies, but to insiders who knew how to rig the system, to pay off the right people, to grease the right palms. The government was entongados [in cahoots], as we say, with the heads of powerful unions, the syndicalistas. In the end, the only people that benefited from Perón’s ‘economic independence’ were those working the system, the corrupt politicians and their corporatist cronies.
Which brings us back to Mr. Scrap Metal. When a large contract was offered for a major pipeline project down in the Vaca Muerta oilfields, Rocca probably thought he was a certainty. That his products, his steel pipes, are not the best in terms of price and quality would not have mattered in the past. He knows the right people in government and has the right political connections that such things were not a primary consideration. According to the papers, Rocca’s bid was 40 percent higher than the competition, an insult to the very concept of market competition...
You must imagine his surprise, then, when his company lost the contract – part of a $15 billion LNG project – to an Indian firm [Welspun Corp.]. It was the first major contract the firm has lost in over 70 years, since way back in the Perón era. This is a new way forward for us. A repudiation of the idea that the state alone knows what’s best and not the people, that it should dictate markets from the top down, that it should plan our economy and our lives. As we’ve seen here, that only ends in disaster. Not many people are around today who still remember when this all protectionist nonsense began. I’m glad to see it being repealed with my own eyes...
“Don Chatarrín,” Luis laughed again. “Remember Juan Perón. He was the politician. He was the one who set this country on its disastrous course. As for Señor Milei, he’s no politician. And thank goodness for that!”
We turned back to the ladies, deep in their own conversation, just in time to hear Ana declare, “We have only one rule in the family chat: no politics.” Seeing their menfolk once more attentive, Ana turned her smiling expression to Luis and asked what the two of us had been talking about all this time. To which her husband of seventy-something happy years replied, “Oh, nothing dear.”
No comments:
Post a Comment