Chainsaw sputtering: Milei’s experiment falters

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0:54The Economist

1:00Hello and welcome to The Intelligence from The Economist. I'm Rosie Bloor.

1:10Today on the show, what went wrong for golf in Saudi and the curious case of the disappearing elephants.

1:24But first...

1:39As we stepped into the office of President Javier Millet in Argentina, right in front of us was a large gold chainsaw with its teeth glinting at us. Kinley Sammon is our Latin America correspondent. I sat down with two colleagues to talk to Millet and he said to me, that is my favourite toy. It's, of course, his famous campaign symbol for cutting, spending, slashing taxes.

2:11And he told me in our interview that his chainsaw is working all day long and that he's looking forward to really letting it rip after he gets re-elected next year. Miller gets energised about his chainsaw above all, but compared to when I last interviewed him back in late 2024, I saw him much tired at this time. He seemed to be perhaps struggling with some back pain. He's still very capable of charms and jokes, but volatile as he was then, perhaps even more so.

2:43But some things certainly still energize him. I mean, he says to me, artificial intelligence in Argentina is going to be embraced like nowhere else, and that will help the country become a world power like the United States, perhaps in just 20 years. With a grin, he told me, get ready for Millet reloaded. Kinley, that sounds like a very confident proposition a year out from the election. Tell me, how is Argentina doing right now? In reality, it's a delicate moment for Argentina and for Javier Millet. I mean, let's be clear, he inherited an awful economic miss. Inflation at 13 % a month, all kinds of red tape across the economy.

3:23and he's deregulated and he's pulled that inflation down impressively. It's about 2 % per month now. Voters rewarded that in midterms last year. But the thing is now they care more about jobs and their wages than they do about inflation. On that side, growth and jobs are struggling. He's not got very long now to make further reforms that would help with that before this election in October next year. So this radical liberal economic experiment, which I I think has fascinated a lot of people and inspired free marketers around the world now hangs in the balance. And this question, I think, is now whether Millet reloaded it is what's going to win that election for him.

4:01He's had quite a lot of success in office, though, hasn't he? He absolutely has. I think we should really recognise that. Improvement on inflation has been crucial to Argentines, even if their priorities are now changing. That inflation improvement also has cut poverty in Argentina by about a third to around 28 % at the national poverty line. Those are big, real achievements. And financial markets, who are frankly a key player in the whole Argentine political economic dynamic, are really pleased. He's been paying interest on the debt. He's paying back some debt. The IMF is very positive about his program.

4:35I think it can only do good things. If the only damage can cause it, the only damage can cause it. He's also, on some things, a very optimistic guy. He's a huge techno-optimist. He says AI can only do good things. The only harm that can come from artificial intelligence is if states get in the way. He wants to give artificial intelligence-run companies full legal rights. So he's very optimistic and very committed to this free market vision in all its applications. That's quite a lot of positives on the economic and business front. What about foreign policy? Well, as foreign policy has been, above all, just extremely tight alignment with the United States and Donald Trump, as well as very tight alignment with Israel, the alignment with Trump has paid off, I think it's fair to say.

5:19At a crucial moment before the midterms, they were under really big pressure. The peso was in danger of collapsing. And the United States stepped in with a$20 billion swap line and directly purchased the peso to back it up. That, frankly, I think helped stave off what could have been a really nasty defeat, possibly one that would have really made him a lame duck kind of a president, and turned it into a strong win. So that foreign policy has been a great success. I mean, the other big thing for Argentina, of course, China, which is a huge trading partner, and he's shown pragmatism on that. On the campaign trail back in 2023, he called the Chinese leadership assassins.

5:54China is a great commercial partner. In fact, look, the United States also commercializes with China. He now says working with them is very agreeable. He says we've deepened our trade relations. And that's paying off too. That Chinese renewed a$19 billion swap line just last month. Yet you say this is a delicate moment. What are the biggest challenges he faces? Well, the biggest challenges are more about jobs and wages and growth. Let's be clear. The country is on track for consecutive years of growth. That's actually a real rarity in Argentina. But it is much slower than planned. And that growth is concentrated in sectors like oil and mining and in agriculture.

6:33And the trouble is those don't generate that many jobs. They're not that labor intensive. And the sectors that are labor intensive, like manufacturing or tourism, have really struggled. There's not as much activity in those sectors as there was even when he took office. What's the result? 230 ,000 fewer private sector jobs than in 2023. And he also boasts, we've also cut 80 ,000 plus public sector jobs. But that is hurting families, of course. And if you look at salaries in the formal private sector, they are still below where they were when Millet took office as well. And the public sector, they're dramatically below.

7:03He says, that's the point. That's what we've come here to do. But again, Argentines are struggling. If you look at what's happening in another way, nearly 6 million Argentines are now more than 90 days behind on some kind of debt payment, right? So people are just struggling to make ends meet. And that's partly because Millet is so focused on inflation, he's kept interest rates really high. And as a result, people can't pay back. And that's also weighing on growth. high interest rates, that limits lending. So he's going for tackling inflation, but there's a cost on the other side. Now, he frankly says there is no cost on the other side.

7:37He says my fight against inflation has not hurt growth at all. There's no direct trade-off there. It looks to me like there are diminishing electoral returns, at least, to carrying on just so exclusively focused on inflation because voters say I care about other things now. Kinley, I should say that sitting in Britain, most people think about Argentina only with regard to the Falkland Islands, which, of course, Millay has made some quite interesting comments on recently. Was that something you discussed? It did come up, and he was crystal clear to us. He says the Malvinas, as Argentines call them, are Argentine.

8:13Las Malvinas son Argentinas. Now, that's a longstanding position. But after our interview, he then ramped up this rhetoric even more in this national broadcast, threatened sanctions against oil companies that might operate there. And they've since escalated further. The government says it will file criminal charges against a company leading the first commercial oil drilling project in the Falklands. Look, I think this is about distracting a little bit, trying to ramp up the base and maybe focus on something that people can get behind, even if they're not feeling so good in their wallet. But it's also indicative of the anger that there is with Millet.

8:45I mean, he raged against Argentine journalists to us.

8:54He posts sometimes dozens of times a day on X. In extreme terms, he calls Argentine journalists human shit, and worse, on a very regular basis. There is a fury about that. So, Kinley, we are a year away from elections. It's a long time off, but not that long. How do you rate Millet's chances right now? Well, the worrying thing for Millet is that his net approval rating is close to minus 30. So that's a tough starting point. He oscillates from sounding super confident, you know, it'll be a walk in the park, but actually more often sounding kind of resigned. Y sabe qué? En el fondo, las decisiones de los argentinos.

9:33Es decir, yo no voy a dejar hacer las cosas que cambian. He says, I won't change what I'm doing just for the sake of winning an election. It's quite an extraordinary thing to say when you consider that really the most important economic policy, in some sense, in the next 14 months is winning that election. If he doesn't, this little experiment may be a footnote in history. There is still some time to get wages to improve, to get more jobs, to improve growth, and that might help him over the line. I think, though, his biggest advantage, arguably, is his rivals. The most likely challenger is Axel Kisilov.

10:04He's the governor of the province of Buenos Aires. That's where about 40 % of Argentines live. But his negative ratings are about as low as Javier Millet's. And he says to us, we spoke to him too, that right now he's not a candidate. But he's associated with all the excesses of the past, of overspending. And his opposition is also divided. And that, I think, helps Millet too. But one thing that really struck me is that when you look at approval ratings, the person with better ratings than either Kisinov or Millet is someone called Miriam Bregman. Well, she's a Trotskyite leftist. So the sense of division in the country is huge.

10:39And with kind of the main contenders so disliked, it's people like her, third-party options, that are eyeing a run. I think Millet is still the favorite, just. but as long as the economy is stuttering, it looks uncomfortably tight. Kinley, thank you very much. Thank you.

11:00Thank you very much. Thank you. You're welcome.

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12:51Let's say you take some of the best golfers in the world, split them into teams, and shake up the format. On paper, LiveGolf might have sounded like a good idea, but its success was always a long shot.

13:08Saudi Arabia, a country that looks like a bunker but has no tradition of golf, tried to disrupt one of the world's snootiest sports. The slogan, Golf But Louder, with pop blasting the fairway, was never likely to go down well with sporting conservatives. Nor was changing the way the game was actually played. Last month, Saudi Arabia's sovereign wealth fund pulled the financial plug. Yesterday, Live Golf filed for bankruptcy. Around five years ago, the Saudi Arabian Sovereign Wealth Fund led a wave of investment into sports around the world. And now it appears to be in retreat. Henry Trix is the US technology and media editor.

13:53The failure of Live Golf is perhaps the most high-profile example. but it also seems to be the case with some of its other international sports investments too. The Sovereign Wealth Fund recently published a strategy for the next five years and the word sports was mentioned only seven times in about 50 pages and six of those referred to esports, which is gaming rather than the physical version. Aside from golf, what else did they invest in then? They had investments in many international sports. Possibly the most high profile one besides golf was football. They invested in Newcastle United and also the Saudi government paid to attract major international soccer players such as Cristiano Ronaldo to Saudi Arabia to play in its clubs.

14:52And there was also investments in tennis, in boxing, in martial arts and in motor racing, Formula One. So it was a really wide spectrum of sports. Before we get on to what's happening now, what was the appetite for all that sports investment? So the main reason why they got involved in this in the first place was as a form of kind of projecting Saudi Arabian soft power on the world. We know, everyone knows that Saudi Arabia is rolling in petrodollars, and this was a way of showing that actually it could diversify its economy a bit beyond oil into sports and also adjacent activities like tourism.

15:40So the idea was to attract tourists to Saudi Arabia in order to watch some of these mega competitions. Now, of course, At the time, many people accused Saudi Crown Prince Mohammed bin Salman of sports washing, the phrase that they use to try and divert attention away from questions about his human rights record and that sort of thing. And I think that partly misses the point. There was a very strong effort to use sport as well to galvanise activity within Saudi Arabia, to get the young people more active, to get them off the couch and out onto the playing fields. And they're still trying to do that.

16:29But despite the ambition, Saudi Arabia's interest in sports investment, especially on the international stage appears to be waning. So what's changed? Well, I think the first thing is that Saudi Arabia has other things to do with its money. I mean, one of the things that it has achieved in the last five years is to attract the World Cup to Saudi Arabia in 2034. And that requires a lot of investment internally in stadiums and that sort of thing. But I think they've also realized that money doesn't buy you everything in sports. Sports is about more than money. And just looking at their experience, you can sort of draw three lessons from its retreat.

17:14And I would say the first one that it probably underappreciated is literally the importance of fans. Saudi Arabia may have loads of money, but it's difficult to buy your way into supporters' hearts. And the Live Golf experience is a good example of this. They spent$5 billion on it since 2021, hoping to create a kind of a rival to America's PGA Tour, to bring a new form of razzmatazz to the game. But it turned off golf's well-heeled supporters. And so even though they got some pretty high-profile players into Live Golf, with too few fans. They couldn't generate enough broadcast income for this to be sustainable.

18:02Money can't buy you love, in other words. Okay, you said there are three lessons. What are the others, Henry? The second lesson is that creative destruction is hard. As business journalists, we're always looking at examples of disruption in industries that have been around for ages. And sports is one of those, you know, it's been here for generations. It seems as though it must be ripe for disruption. And many try to shake up established sports. Sadly, many of them fail as well. So we saw a recent example of this in football when a few big investors tried to buy a chunk of FIFA and take control of the World Cup.

18:49and this was partly an attempt to weaken the dominance of Europe in world football and it was an abject failure and they retreated with their tails between their legs. Something similar has happened in athletics. Grand Slam Track, which was started by Michael Johnson, the former American sprinter, again it was meant to create an alternative athletics league but it filed for bankruptcy last December, less than a year after its first fixture. It sounds then like it's just not a great time to be investing in sports. Curiously, this is a time when there is actually a lot of investment in sport, especially from financial institutions who see it as a great long-term investment.

19:37And a good example of this is the sale of the LA Lakers basketball team, not long ago, which was sold by its former owner, Mark Walter, to the head of a New York venture capital firm, as well as to Bob Iger, the former boss of Disney, for$12.5 billion, which netted him$2.5 billion more than he'd paid a year earlier. So there is interest, but time or timing is important. And therein lies the third lesson, if you like. Building a winning sports franchise can take generations. We've talked about the World Cup and we had the World Cup in America and Mexico and Canada this summer. It looked as though American soccer really started to come into its own this year.

20:32And that's great, but it's 50 years after the great Brazilian footballer Pele went to play for the New York Cosmos for the first time. So it takes really a long time for these kind of changes to embed themselves. So perhaps the Saudis were not prepared to wait around for generations for their investments to pay off. Henry, thank you very much. Thank you, Rosie. Great talking to you.

21:18In Arthashastra, an ancient Indian manual on statecraft, elephants were prized assets. Abhishek Kumar writes about India. Kings presented them to forge alliances. Generals relied on them to break enemy ranks and destroy the gates of forts. Ganesha, the elephant-headed Hindu god, is worshipped as the remover of all obstacles. But that reverence has not translated to protection. Last year, a survey by the Wildlife Institute of India counted 20 % fewer elephants than in 2017.

22:06So why are India's elephants vanishing? Part of the problem is geography. Villages are scattered in the forests of a densely populated India. Elephants live in confined narrow corridors of habitat and even those are shrinking. As infrastructure like roads, railways and power lines cut through forests, elephants find their way onto farms and into local villages. Mining sites also get in the way. As do humans, often driving elephants away with loud noises. And in some cases, fireballs and crackers, even though the Supreme Court has banned them from doing so. Electric fences can also be a problem.