Episode 353 – Dollars for Oligarchs, Austerity for Argentina with Daniel Kostzer

Steve Grumbine:
00:00:42

All right, folks, this is Steve with Macro N Cheese. You know, we’ve talked a little bit about the Global South and we’ve talked a lot a bit about
South America and particular my friend Daniel Conceicao. But we got another Daniel, because it seems like Daniel is the name that I attract in the Global South.

And I’m being facetious here, but my next guest is a really, really sharp cookie. We’ve had him on before. Daniel Kostzer.

And Daniel is the chief economist at the economic and social policy of ITUC-CSI International Trade Union Confederation since January of 2022, and a former senior regional wage specialist for Asia and the Pacific at the regional office of the International Labor Organization until March of 2021.

He’s been in so many things, and of course, he has worked with Fadhel Kaboub and others at the Global Institute for Sustainable Prosperity, you name it. Anyway, he is a fellow traveler within the modern monetary theory space, and I love this guy.

He really has a great angle on understanding not just the ledgers, but all the geopolitics that goes behind it. And, folks, if you really want to understand this stuff, it’s not enough just to understand the ledgers.

You got to understand the politics and the motivations and the dialectical understanding of how we got where we are. And so let me bring on my guest. Daniel, welcome to the show, sir.

Daniel Kostzer:
00:02:18

Thank you, Steve. Very happy to be here with you again. My pleasure.

Steve Grumbine:
00:02:23

Thank you. It’s my pleasure as well. And for the record, folks, I just want you to know something. Daniel listens to the show. Thank you so much. That made my day.

It absolutely made my day. So I appreciate you agreeing to come on and discuss this recent $20 billion giveaway by Donald Trump.

It appears on the surface anyway, to the average rank and file, and I would put myself sadly in that because I’m not as well versed as I need to be.

It appears that what Donald Trump is doing is trying to help his buddy [Argentinian President Javier] Milei out, who has turned this libertarian project down there into a dollar project, basically, you know, bending a knee to US interests and so forth.

But I think that there’s a lot more to this story, I mean, obviously the news is projecting out that, you know, people are upset because Argentina’s soybeans outpacing the US soybean producers because of Trump’s tariffs on China.

And obviously now that China is dealing with Trump’s tariffs, China said, “well, we’re not buying soybeans from the U.S. we’re going to buy them from Argentina.”

And so there’s all these things on the surface that appear to be one type of way, but in reality, in talking with you to set up for this conversation, it appears that it’s something else altogether. Can you tell us about what the motivation for Trump giving $20 billion?

First to Milei, but then secondly, even talking about private funds matching another 20 billion that is being discussed right now.

And I know [US Treasury Secretary Scott] Bessant had a point on this, and I know that Trump is really excited about Milei is out there bragging about it, but what’s really going on here?

Daniel Kostzer:
00:04:15

Well, you mentioned about some people looking only at the ledgers, and I remember one of my professors of econometrics, he used to say that the only way of doing good economics is by having history and data, having the ledger, but also the history. Because if you don’t have the history, you are just showing a picture. If you have the history without the data, you have a narrative.

So you have to match both in order to understand and put everything in a coherent way to try to explain.

I don’t want to be too long in the explanation, but let me tell you a bit on how and what is happening in relation to the help of the US and Trump to Argentina. Argentina in general, it’s a country that deals with the double type of currency.

The dollar is the unit not only of account for some durable goods and assets like housing, it’s also a way of saving money because of the instability and the inflation in Argentina. We can discuss many times about the causes of the inflation of Argentina.

But mainly I can tell you that the inflation, at least in Argentina, is the emerging sign of the class struggle, of the distributional struggle, the struggle between capital and labor, and also inside the capitalist class, where you have the rentier, agricultural landowner class that is very much linked to foreign markets versus the industrial class, which is very much linked to the domestic market and the purchasing power of the workers.

So in a country that has a quite empowered working class like Argentina, because many, many years of progressive policies in relation to the working class, not even dictatorship were able to destroy this. And the main expression of this class struggle has the form of inflation. Let’s put that part on the side.

Argentina, when you start to have an increase in economic activity, the people demand more dollars because you need to import capital goods, you need to import certain inputs that are difficult to substitute, or you need to make remittances of the international companies to their headquarters. So there is always a strong need of dollars. That in general is linked to the level of economic activity.

What has been happening since Milei took office? When Milei took office, the first thing that he did was a very strong devaluation of the peso. The peso increased by 116%, which is savage, you know.

And when you increase so much the dollar, the foreign exchange in Argentina, you immediately have a recession. That recession takes a relatively long period until it’s reflected in the reduction of prices.

But you start to have higher unemployment, lower wages, of course, and lower purchasing power wages. And those producers that have the capacity of setting their price, in general, monopolistic activities related to energy production, basic industrial goods and food, they increase the prices and they deepen more the recession.

What happened after that is that Milei, with his idea that inflation is only a monetary issue, that the only problem of the inflation is the money printing and low interest rate. He increases the interest rate at levels never seen before, 35% per year, 40% per year after the devaluation.

So many investors from abroad, mainly the traditional hedge funds, the usual suspects that we all know, Blackrock, Discovery, Vantage and all these famous guys, they decided to go to Argentina, sell dollars to the central bank, get the pesos and start to gamble in pesos in share deposits, investing in public bonds, investing in shares of large companies of Argentina. In the meanwhile, the inflation, although much lower than before, was eroding the real exchange rate.

That means that the peso started to get stronger and get stronger, slowly but steadily.

And you reach a point where those investors that went to Argentina, and this could be located around April 2025, they start to decide that they would like to leave the country. What was the problem to leave the country? That Argentina had capital controls. You couldn’t buy as many dollars as you wanted, yeah?

But they started to prepare the field for this “flight to quality,” as investors like to call that. That means the repatriation of these funds with the IMF.

So they decided that the IMF was going to give a loan of $20 billion, out of which $15 billion were going to be in cash immediately. And Argentina committed to open the capital account. So in April, they got the loan from the IMF, $15 billion.

With the pressure of course, of the United States and Trump.

They opened the capital account and all those hedge funds that they were overinvested in shares in public bonds and insurance certificate deposits in Argentina. They started to buy dollars. And they were so much that the dollars didn’t last enough time. The reserves were completely exhausted.

And the government of Argentina decided to do one measure, that is, you mentioned the soya producer in Kentucky.

The government decided, “Okay, we are going to lift the export taxes for soy producers so you can sell your soy dollars to the central bank with zero taxes.” And that thing lasted only 48 hours because they also sacked all the funds, all the dollars that they were at the central bank.

And they had to close again the process of selling dollars to the hedge funds to leave the country.

That is when they started to negotiate with Scott Bessent and the Treasury, because it seems that one guy, his last name is [investor Robert] Citrone, who was a partner of Scott Bessent when they were working for Soros, and they almost debanked the Bank of England in 1992 with his Discovery {Capital Management] fund.

They were overexposed to Argentina and they started to devise or to design alternatives in order to save these guys, to allow them to get those profits of 50% in real terms per year, in dollar terms, 75% and even 100% of profits of returns in one year to take out the money. And you know, when you invest in currency, the only way of realizing your profits is when you get the original currency to live.

It’s only an accounting. When you have the money, pesos, and you say, “I earned 75% pesos”. You will earn 75 when you make those pesos into dollars and you leave the country. And that’s what’s happening.

In relation to the swap promised by Trump. People tend to say, “Show me the money.” Well, nobody knows where is the money.

Until now, the only thing that we know that happened is that the US Treasury, they opened accounts in some banks in Argentina, in Santander and Banco Galicia, by local banks, and they started to sell dollars in Argentina in order to keep the dollar more or less stable, but with little success. Scott Bessent made a presentation, I think last week or 10 days ago, where he said that the Argentine pesos was undervalued. Something [that] is not true.

Domestic prices in Argentina in dollar terms are very high, comparable to prices in the US or prices in Europe, with salaries that used to be the highest salaries in South America and now are among the lowest salaries in South America. So they froze the pensions.

We have a large number of pensioners. Our pensions coverage is almost 96% in Argentina because of policies that they were very inclusive, especially for women. And those pensions are completely frozen.

The Milei government didn’t send the money to the provinces that was always used for infrastructure, didn’t invest a single peso in infrastructure, not in new infrastructure, in infrastructure maintenance. After two years, the roads in Argentina are completely destroyed. More accidents. They cut expenditure for disabilities, for children’s health.

So it’s a complete disaster, yeah? But the money that is coming from the US and from the IMF has been only to bail out those hedge funds and allow them to leave the country.

Steve Grumbine:
00:14:49

It’s funny when you look at Mark Cuban and this is slightly unrelated, but I want to make the point. He said, “Hey, if you eliminate billionaires, then you’re going to eliminate the stock market and all this public savings.”

And in reality, what we’re talking about here is the US government fattening up these hedge funds so that they can make money literally. This is not regular Main Street people. This is elites. This is the wealthy.

This is folks that really, truly don’t have the best interest of the working class in mind.

And I see working class being global, not just in the US, the working class of Argentina, the working class of the United States, the working class of China. China is taking extraordinary measures to make sure that its people are taken care of.

And not to say that they’re a paradise of socialist whatever, but they are definitely more focused on what is good for China. Whereas what I’m watching now happen is what’s good for the billionaires, what’s good for rich people, what’s good for the elite. The people that rub elbows with Trump.

And based on what you just said, it sounds like it’s being sold under the idea that we’re helping out the people of Argentina, but we’re not helping them out at all. This is really a bait and switch. This is really helping out very, very rich oligarchs and elite. It’s basically elite control fraud.

Daniel Kostzer:
00:16:22

Listen there, Steve. You always have multi-causation and different interests, right?

As I say, the first interest is the interest of bail out these hedge funds and allow them to leave the country. Then you have a secondary sort of interest. Yesterday or the day before yesterday, three private jets from JP Morgan landed in Argentina.

That I think it’s the first time that you have the economic team of a country where the two secretaries of the Minister of Finance or the economy and the president and the vice president of the Central Bank, the five are former employees of JP Morgan. They are preparing as they did during the so-called Brady Plan.

The Brady Plan was a restructuring of the foreign debt that was left by the dictatorship of Argentina that was also managed by the JP Morgan.

They are planning another type of business that would allow them to have a large portfolio of bonds that they will sell in secondary markets to fold their own clients and have a new business. But actually they don’t give a damn in Argentina.

And one of the secretaries of the Ministry of Finance, the Secretary of Finance is former JP Morgan, now is the Foreign Affairs Minister since yesterday he was appointed.

So we have a government with the teacher of JP Morgan, with the support of JP Morgan and the support of all this plutocracy of the United States under as you say, the bay that they are helping the Argentinian people, that as Trump said, “They are dying.” Of course, in Argentina things are very bad. We are having midterm elections next Sunday. The results are not very optimistic for the government.

The government already lost in September a very important midterm election in the province of Buenos Aires, which is the largest province in the country.

The governor of Buenos Aires, Axel Kicillof who who is a potential presidential candidate in the future, won the elections by a landslide victory and a big margin of votes. In Argentina things are very bad. But again, to put the idea that the support is to the Argentinian people is just a complete lie.

And I think that the American people should be aware that every time that either the US government, the financial sector, the IMF twice “helped” Argentina between brackets, actually they are bailing out these quick gains, quick profits made by the hedge funds and the financial sector.

Steve Grumbine:
00:19:25

Can we talk about the mechanics of that for a minute? I mean, when we were offline preparing for this, you really, really made this point very well.

And I know we’ve touched on some of this, but I really think it’s important for people to understand the way foreign currency, and when I say foreign, any country that’s dealing in a currency not their own, that’s foreign currency. It’s foreign exchange, forex, in general, you’re dealing with foreign reserves and you’re dealing with banking that these investors into the peso are trapped with a very, very cash-poor nation. A nation where its currency is really floundering on the international market due to a host of reasons.

And by propping it up with these investments, now you’ve turned it into US dollars and the only way for them to extract their losses out of Argentina is to inflate it, get US dollars out of it and then pull the money and then go. Can you walk us through that more technically than my terrible explanation?

Daniel Kostzer:
00:20:31

Well, actually, if you remember this thing that I mentioned, the devaluation of the sterling pound in the UK in ’92, the Tequila Crisis in Mexico, the Sri Lankan debt crisis of some years ago, the crisis in Iceland in 2010, I think was the year. The phenomenon is always the same.

You start to attract investors from abroad that in general, the first one to know are the big hedge funds, mainly because they are linked many times to the economic authorities of these countries. Yeah? It’s not that they are such a bright people. They have inside information. [Oh, yeah.]

So they know that there will be a process of certain exchange rate stability that is maintained that stability via high interest rates.

After the initial devaluation that Milei did in Argentina in 2024 when he took coffee, everybody knows what we call the model of stop and go, that the economy suddenly gets into a recession. So you make a huge devaluation in order to recover competitiveness of the export sector, because now the exchange rate is higher.

So what they did there was a devaluation. They went into the country. They bought the shares of energy companies because the exports of their energy are higher.

They bought shares of agricultural companies because the export of primary products are higher. They got into the public bonds. Public bonds,
they used to have 8, 9, 10, 12% of interest rate because of the country risk and all this sovereign risk. So they get into the country and they start to accumulate profits in the short run.

The problem arises when, if you have a capital control that means that you cannot buy the dollars. The problem arises, how are you going to get those profits that you accounted?

How are you going to get them out of the country to return to the headquarters in Wall Street? If you have capital controls, you cannot do it. Why do you have capital controls? Because you don’t have enough dollars to serve these guys.

So that’s when the IMF comes and say, “Okay, here you have $15 billion out of 20. That was the loan. But you have to open your capital account.”

The IMF is, I would say, the auditing guarantor of these financial investors that went to Argentina. Those $15 billion didn’t last long because the money that they were speculating in the country was much larger.

So as soon as the money of the IMF was exhausted and the Central Bank, it was when they started to devise which other alternatives we had. The first alternative was to tell the exporters, “You sell your exports now, you are not going to pay taxes because we have export taxes for agricultural products, yeah? They sold the part, but they also exhausted those dollars. And then is when Bessent came and said, “We are going to get in charge of your economy. We are going to provide you as much as whatever is necessary,” said Scott Bessent. “Whatever is necessary.” And they started to buy pesos, which is a crazy strategy.

You remember that Milei, when he was campaigning, he used to say that he was planning to dollarize the Argentine economy. But now Bessent is selling dollars to buy pesos.

Perhaps we end up specifying the American economy because it seems that it’s a bucket with a hole they never get filled. And the idea of the swap hasn’t been implemented.

Perhaps the swap is going to be the collateral for this bond business, of the restructuring that JP Morgan is planning to do. But we don’t know. We don’t know. That money of the US, the money that [was] promised [by] Bessent and Trump never arrived to the country.

The only money from the US that is being used in the country is the money that they are using to buy pesos.

Steve Grumbine:
00:25:10

Wow. Wow. I guarantee you other places are not talking about this because every article that I read says it completely backwards.

They have it about, you know, people are complaining. “Well, the US has money for Argentina, but not for the American people.”

Daniel Kostzer:
00:25:26

And this is for the American people and very targeted support of American people. The French ramasse.

Steve Grumbine:
00:25:34

It’s humorous because it’s not just the regular American people though. It is the elite, the oligarchs of the US, the Silicon Valley investors, the Wall Street investors.

And this is why I have such a pang in my heart when I hear people leveraging MMT to talk about investing, when in reality, some of the stuff you’re watching, this is evil.

This is not like good things, you know, in my mind, in my world, the way I view things, I’m seeking liberation for working-class people, not immiseration. And all this does is fatten the already wealthy.

And further extract from Argentina while extracting also from sellers in the US who are working-class people as well. Now, mind you, yes, there are some oligarchs, but I’m sure they’ve got payola coming through some other means.

As long as they kiss the ring and bend the knee.

Daniel Kostzer:
00:26:33

Of course. But let me tell you something, because I know that this sounds a bit odd or sophisticated or conspiratory. The US used this tool. I think it’s called the
currency stabilization fund a few times.

The first, I think it was in 1986, if I properly recall, that was during Reagan’s period. That the yen was very devalued and the deficit in the trade balance, especially with cars, that Toyota flooded the US during that period.

The US started to buy Japanese yen as a way for appreciating the yen and recover part of the competitiveness of the US dollar, yeah? And that thing worked. I think that they invested less than $1.5 billion in that operation, but they were able to appreciate the yen.

You remember there was a big appreciation in the price of real estate in Japan. It created a bubble in Japan during those years because the US was buying yen and appreciate the yen in relation to other currencies.

In 1994, when was the Tequila Crisis, the Mexican crisis, the US also used that money to support Mexico with the help also of the IMF. Because Mexico, number one, it’s a neighbor of the US. You know, the Mexicans, they always say, “Poor Mexico, so far from God and so close to the US.”

They used that money in order to support a country that they already had the NAFTA.

They were a large number of investors, American investors in the tequila, in the car industry, sorry, in the maquila area of the garment sector, but also the car industry in the north of Mexico. That money was to help a neighbor, but also a commercial partner that on top of that, in ’94 had the uprising of the Zapatistas in the south.

So it was a mixture of economic and political action. The US also helped Uruguay in the year 2002, when Argentina has the crisis and Brazil had the devaluation. Uruguay was very depressed the economy.

So they used the same fund to help Uruguay.

The difference this time is that behind that front of helping the Argentinian people, they are actually helping their friends: this plutocratic establishment that is residing around Trump’s government nowadays. And that’s something that we have to tell everybody. They are not helping the Argentinian people. They are not even helping the Milei government.

Something that I would also regret, yeah?

Steve Grumbine:
00:29:39

Right.

Daniel Kostzer:
00:29:41

But they are not even helping that. This is not ideological, this is business. Vito Corleone used to say, “This is not personal, this is business.” Yeah? [Wow].’

Intermission:
00:29:54

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Daniel Kostzer:
00:30:16

As I say, they may have different levels of interest.

One level is all these CPAC [Conservative Political Action Committee]  right-wing, extreme-right people in the US and in Europe trying to support this guy with a chainsaw and trying to talk about the new right and all this extreme anarcho-capitalist message. The second level could be, “Let’s reduce the presence of China in Latin America by conditioning the Argentinian government.”

China now turned to be the first commercial partner of Argentina, more than Brazil. [Wow.] Even we have the Mercosur, which is a trade agreement. Last month China turned into the largest commercial partner of Argentina.

That could also be, you could say, not justifiable, but understandable. But in this case, it’s only, “Save the friends. Save the friends.”

Steve Grumbine:
00:31:16

So when you think about this, it sounds like there is a playbook. This is not a one-time thing. This is a standard step by step process that keeps happening over and over and over again.

Would that be a fair statement?

Daniel Kostzer:
00:31:32

I think so. I think so.

And it gets more, I would say bizarre and absurd when you have two governments of lumpens, because Trump is not the traditional capitalist. They are not the Rockefellers or the Henry Fords of the beginning of the 20th century. These guys are vultures profiting in the short run.

And the government of Milei, they are ideologically marginal because you don’t know many people that defend the Austrian school of thought in the world. Not even Schumpeter, who was an Austrian, defended the Austrian school. I say they are lumpens.

They are typical lumpens because they don’t even believe in a capitalist project. Trump is a guy that one day he says, “50% of tariffs to Brazil.” The next week he says, “Well, I saw Lula. It’s a nice trap.

We cross each other in an elevator in the UN and we will start to negotiate.” And now one day he said, “Well, Canada,” and then. “No, Canada.” We are not talking about politicians. These are another thing. [Yeah] These are another thing.

These are marginal in what you may call, you know, the leadership. I was thinking even somebody like Richard Nixon would be spinning his grave with this government.

Steve Grumbine:
00:33:02

I think I’m going to take a step back for a minute. We all have an idea and some of us are more graduated away from this than others.

But I think we all, at least at some point look to our governments, plural, like around the world, and think they’re there to serve our needs.

And so everything that we have in our hearts and our minds, from the global hegemon to the local hegemon to the cultural hegemon, we have these beliefs that shroud the actual thing that’s happening right before our eyes.

And we assign different beliefs to them, assign different meanings to them, because it’s really hard to believe that you’re literally being led by a criminal. It’s hard to believe that you’re being led by somebody who is simply extracting as much wealth as they can.

And you just have it in your head that, “No, no, no, they’re there to take care of us. They’re there to keep us proud of our country, to keep us having streets and electricity and jobs and blah, blah, blah.”

But these guys, they’re not even trying to do those things. They’re literally there to extract as much wealth as they can for their cronies. Am I missing something?

Daniel Kostzer:
00:34:20

Well, I think that you are completely right with this. A president who is willing to accept a plane from another country. Can you imagine that?

Steve Grumbine:
00:34:31

It’s crazy.

Daniel Kostzer:
00:34:32

He went to Qatar, he said, “Oh, they gave me a plane.”

You know, if they will get a golden watch, they will have to declare in other times, you know, and everybody would say, “Well, I’m not sure if that is the gift or what.” Yeah, or bribery. And this guy is willing to accept a plane. Yeah.

And it is more or less the same our president, one day he woke up and he said, “We are issuing cryptocurrency that is going to help the investment in small scale enterprises.”

And two hours later they pulled the rug and a couple of hundred million dollars that they evaporated from the pockets of other idiots, libertarians that they thought that they were going to become rich by investing their savings in the cryptocurrency that had the name of the President.

Steve Grumbine:
00:35:24

Wow.

Daniel Kostzer:
00:35:25

How can you understand that the US President has a cryptocurrency under his name?

Steve Grumbine:
00:35:33

I’m telling you, Daniel, I am probably a minority of minorities within the MMT community because I know a lot of them want to believe good, glorious things in the institutions and they have that institutionalist background. I’m looking at it and I see nothing but capture. I see nothing but a captured state.

If it was ever a state to begin with, for the people, it is the elite, it is the corrupt. It’s not a partisan thing, unfortunately.

I wish I could say, “Oh, the Democrats are good. The Republicans are bad, and that’s the easy answer to everything.” I mean, that may be truer in some ways, but it’s not true.

Ultimately, all these folks are literally spinning up schemes and scams for their wealthy friends and for their donor base. And the will of the people is completely ignored. Or like [Italian anti-fascist Antonio] Gramsci would say, this has been manufactured.

The crisis of hegemony that has occurred allows them to spin yarns that tell people things that they want to hear. And they believe them because, of course they believe them.

They’ve got it captured at the schools. They’ve got it captured in the newspapers. They got it captured in the churches.

They’ve got it captured everywhere you turn, even the sitcoms and comic books and everything else helps to repeat these lies of empire. And ultimately, people’s view of how things are is not really based on facts. It’s based on feels, how they feel about how the vibes go.”

And so their belief system forces them to look at truth and say, “If I adopt that truth, I’m going to be really miserable.”

Daniel Kostzer:
00:37:18

Yeah.

Steve Grumbine:
00:37:19

So they just push away the truth and accept the lie. And so when we’re trying to educate people about these things, you’re not just dealing with ledgers which are pure truth.

I mean, that’s the thing about accounting. It’s true. These are true statements. This science, actually, accounting is science.

But when you’re dealing with people that have been denied education, denied real honesty, and have lived in the cultural hegemons’ institutional brainwashing, it’s very hard to break free and see soberly what is happening before them. Is that the veil they’re using to pull these things off, or do they not even care about a veil? I mean, what.

How are they hiding in plain sight like this?

Daniel Kostzer:
00:38:07

That’s a good question. But let me ask you, Steve, when did you imagine that somebody will question that the Earth, it’s a sphere, right?

Steve Grumbine:
00:38:19

Yeah. We still got flat Earthers, don’t we?

Daniel Kostzer:
00:38:21

I don’t remember. I’m going to turn 70 years old next February. Yeah. And I would say, in 65 of my 70 years, I never heard somebody saying that the Earth is flat.

You can deny climate change. You can deny many things, but that the earth is flat? And more and more people with that.

When you see some of the social media, when you see how the public opinion was manipulated in relation to the Brexit, for example, in the Italian elections, in Argentinian elections when [Mauricio] Macri won in 2015, when you hear that they hide everything and they bring to the fore complete lies. And then again, we have this class that is not new. Let’s be honest, Italy was an avantgarde with and his gang of lumpens also. Yeah?

But it’s something that is widespread in such a way that we don’t have statements, we have kings, aspirational kings. If you would look, and from somebody
from the outside, if you look how the decoration of the White House nowadays, it have more golden than the Hermitage in St Petersburg now. [Wow] Go and see Trump’s office. It’s full of golden things. I remember the austerity of the Oval Office during Kennedy times or even Nixon’s times.

It’s insane. These guys, they think that they are kings. They feel that not only they are an elite leader, they are kings. Their power was invested by somebody
or something superior and they behave in the same way. They behave in that way. In the case of Milei, he fulfilled his desire of being a rock singer two weeks ago.

I don’t know if you had the opportunity of seeing an embarrassing, you know [yes] horrible, embarrassing spectacle. Singing, eating crow.

Steve Grumbine:
00:40:44

The idea though. And see, this is where I’m at a different point in my journey right now. As I learn more and I grow with each interview I do.

This podcast has been as much about my growth and learning things. It’s been a great personal journey that I hope many thousands have been able to share in with me.

But one of the things that I really struggle with is, is how stupid do regular people have to be to fall for this stuff? Right? And I thought, genuinely, how can you believe this stupid thing? It’s so stupid. How could you possibly believe such a stupid thing?

But in reality, it’s so much more nefarious.

People are worn out, people are drug through a series of lies just to survive their workday, to take care of their children, to pay their bills, to take care of their health.

Daniel Kostzer:
00:41:39

Exactly.

Steve Grumbine:
00:41:40

And to feed through all of the lies. It is so hard. And then, unfortunately, when a person speaks truth, they’re looked at like they got 27 heads and they’re crazy.

Daniel Kostzer:
00:41:53

Steve, I understand that we feel frustrated. I always say that the future is not what used to be. I never expected that I was going to reach my age and have the world in this state.

You know, I’ve been always a socialist. I always was expecting that revolution that will make us better people, solidarity and this thing.

But I don’t think that it’s a problem of stupidity of the people.

I think that what can you expect of a young chap who has a $200,000 debt because he pay his studies under the assumption that he was going to have a future living, social mobility, a good income, and he worked in an enterprise and then after working, he has to jump into a taxi to be Uber in order to pay the bills. Yeah.

Or that they will never have their own house because they have no access to a mortgage because half of their income is under declared paid under the counter. Yeah? Perhaps in the States, more flexible.

But here in Europe, for example, where I’m based or in Latin America, you see that where the expectation of younger generations are so diminished. We, the baby boomers, we saw that our parents were better off than their parents. We were better off than our parents.

But that’s not happening with our kids. And we induce them in the, I would say the wrong journey of you have to study, you have to prepare yourself, invest in your human capital.

That that’s going to guarantee that when you get older, you are going to have a pension. You are going to have a house. And that’s not true. That’s not happening.

Steve Grumbine:
00:43:48

100%. Agreed? Yes.

Daniel Kostzer:
00:43:50

I have a son. He’s an economist. He has two masters, he has a PhD. He teaches in two universities in Spain. And sometimes he has problems to pay his rent.

Steve Grumbine:
00:44:02

Yeah. When I was growing up, my mom and dad, they had very low expectations. I mean, my dad, in fact, said, son, “Why don’t you get into asbestos removal? They have good benefits, or you could be a trash man even, right?”

And it broke my heart that my dad said that. But I was a drug addict and a alcoholic and I was living pretty rough. I was a disaster. So I guess that wasn’t terribly off.

You know, he probably didn’t have high expectations that I was going to live much longer, quite honestly. But the reality is I killed myself going back to school, and I got two master’s degrees and I started a PhD that I didn’t get to finish.

But I have $125,000 worth of student debt staring me in the eye, and I’m almost 60 years old. I’m 56 years old.

And so you think about it, you know, I’ve probably gotten to about as high in the food chain, unless I suddenly win the lottery or something crazy happens. I probably reached the pinnacle of my career, my earning potential, and it’s probably going to flatten out or stagnate or go down as time goes on.

And I still got the bills of a guy who has two master’s degrees, but not the career of a guy who does two master’s degrees. And as a result of that, people like myself are trapped in a bubble. There’s no escape.

We look like we’re doing well, but in reality, we are broke because of debts that we incurred chasing this American dream or this capitalist dream. And to your point, we went out and got education that didn’t do what it said it would do. It didn’t give the kind of future that we wanted.

What it did was it indebted us and put a ball and chain to our leg trapping us in the nightmare. So it makes all the sense in the world why people would fall for these things, because the only reason why I’m not falling for them.

And again, it’s nothing great about me, it’s that we started this nonprofit. I get to do these podcasts. I get to talk to brilliant people like yourself, and I get to learn. And I go, “Oh, my goodness, I didn’t know that.”

So, for me, I have a special privilege of being able to talk to brilliant people that keep me honest. And I also have a voracious desire to learn. So I read a lot, but everybody doesn’t have that. And that’s my point.

That was why I was saying I started off believing, you know, everybody was just stupid. How could you be so stupid? And I was bitter about it because I kept seeing them as a barrier to people’s survival.

And they are really, in fairness, to some degree, they’re being used as a pawn in this game of cultural hegemony that keeps us believing these lies and functioning under these lies.

And there’s no real pathway to changing the way people see the world short of massive organizing that people just don’t have time or energy or desire for, which is depressing, to be honest. But anyway, I’m sorry.  Your thoughts.

Daniel Kostzer:
00:47:08

You are right. But, you know, you remember that I mentioned Vito Corleone saying that “It’s not personal, it’s just business.” I’m going to go again to Vito Corleone.

Vito Corleone used to say, “Don’t hate your enemy. It clouds your understanding.” Yeah? [Yes.] And to be bitter sometimes, going back to Gramsci, we need to keep the “optimism of the will.”

Although we have the pessimism of the reason or the facts, I think that we have to keep the optimism. I still working again. I’m going to turn 70 because perhaps it’s my messianic narcissism that makes me think that I can help to change things.

But we have to keep pushing. You know, it’s true. It’s a cultural battle for the hegemony. We had better times. We are in bad shape now.

But if we are a dialectic materialist, we should know that there is a thesis, antithesis and synthesis. And perhaps we are in the moment of the antithesis, and we are just one drop in the ocean of the history. So let’s keep pushing.

Steve Grumbine:
00:48:26

I like that. I really do. I like that a lot.

One of the other things I want to, I guess, throw at you as we’re coming to a close, because obviously the stuff with Milei and Trump is a whole lot of bait and switch, a whole lot of smoke and mirrors that to the average person reading the news, they just absorb it and move on to the next subject. But in reality, I think what you just said is really powerful.

I mean, yeah, we hope that we can be, you know, an agent that changes the way the world goes, but in reality, we are a drop of water in the ocean.

How do you find the strength, if you will, to continue a fight that you know will probably not lead to victory, but maybe in the end, if you pile enough drips of water, you become an ocean yourself. What would your advice be?

Cause I’m really excited to hear your socialist angle on this, because quite frankly, a lot of socialists that I speak with tend to look backwards at 1917 because they’re looking for instances of success to hang their hats on, and then they end up relitigating discussions from 1800s and stuff that are just not relevant. Or maybe they are relevant, but not to the degree that they should be.

So how do we view today as socialists, where you know you have no socialist government, you have no socialist system. Most average people have no idea what socialism even is. And so you really have no organization to bring about these kinds of changes.

How do you keep the hope alive? How do you tell someone, “Hey, there is something to keep going for Don’t forget that”? I mean, help me.

Daniel Kostzer:
00:50:06

It’s not a simple answer. I always remember that my grandfather used to say that the best is the enemy of the good.

And I also think that in the ’70s, you know, when I was a teenager or I got into university, when I defined myself as a revolutionary socialist.

I think that we were a bit intellectually lazy in the sense that the idea of a sudden revolution of the masses uprising and changing the system was desirable. I still desire for that, but actually was a shortcut. It sounded more like something eventful rather than the construction that we need to make.

And the construction is very difficult. It has up and down, you advance and you go back, you know.

And I learned during the period that I used to work for the Ministry of Labor in Argentina in the 2000s, where we implemented a very large program. I think that in the previous podcast we spoke about this, the Jefes program in Argentina that was there.

Steve Grumbine:
00:51:21

Oh, yes.

Daniel Kostzer:
00:51:22

I learned that those small steps, even if sometimes they are ephemeral, that they disappear, they are okay. They are good.

Another thing, last year, the ILO, the International Labor Organization, had a meeting, the tripartite meeting–governments, employers and workers–in order to discuss the idea of living wages. Living wages used to be in the constitution of the ILO, but disappeared since 1944 in the Philadelphia Declaration.

So this discussion came again in 2024, 80 years later.

And it was a success because we were able to have a clear definition of what a living wage is, how to be defined and estimated with the participation and the discussion of the workers in social dialogue and tripartite meetings. Those tiny little victories, they give you the idea again, the best is the enemy of the good.

And the construction of a new society is by the adding of goods. Sometimes they are wiped off.

I used to believe that the achievements that we had in Argentina between 2003 and 2015 were irreversible because we have the pension for women in charge of household. We have the universal child allowance again. We expanded the pension system in Argentina up to 96% of the eligible population.

We had employment programs, skills program. I thought that those things were very difficult to reverse.

But the right-wing governments, they always have the power, the strength to undo those things. So I think that we have to still fight because we know that that was possible. We don’t have to look at those things like a lost paradise.

On the contrary, we have to look at them as something where we should go, knowing the different situation. And I’m sure Milei will lose the elections either next Sunday or 2027, no doubt of that.

And we will have a better government, perhaps will be difficult to do things.

You know, in Ecuador, after the defeat of [former President Rafael] Correa, well, things look very bad, but we will have again positive and progressive governments in other parts of the world. Sometimes less ambitious than what we were when we thought on the revolution. Yeah?

There are interesting example in some countries with all the difficulties and all the differences in terms of political. You have with a country like Vietnam, where after the war GDP went down by 50% but social indicators like health and education improve.

So I think that there are signals that we have to look at to recharge the battery and find. I’m not sure if it’s a strength, but at least the optimism to keep pushing.

Steve Grumbine:
00:54:41

That’s very well said. I have to chew on that a little bit because my optimism is waning. My optimism is below sea level.

All right, listen, Daniel, I can’t tell you how much I appreciate you. Like folks, I don’t think you realize how hard it is. We don’t go into these things with a bunch of questions.

We follow the train of thought through the conversation and it takes us where it takes us. And there’s a reason for that. I don’t know what I don’t know. And so once something jumps out at me, I say it.

And I appreciate guests like Daniel who stay fleet-of-foot and react and respond in accordance and help me grow as an individual and hopefully help you grow in your own walk as well. These podcasts to me are how my brain stays, you know muscle, how I continue to grow intellectual muscle.

And Daniel, I consider this to be a tremendous workout today. Thank you so much for your time. Tell everybody where we can find more of your work.

Daniel Kostzer:
00:55:43

In the ITUC website you find. And if you google my name, you will see some of my publications. Mainly I work in poverty reduction, labor markets, wages, income distribution.

I consider myself a bit specialist in generalities. My drive is always political and I found that the way of expressing it is via economics.

I was first some sort of political animal and then I became an economist because I found that was the most adequate tool to make proposals. Unfortunately, I didn’t have enough charisma to go kissing old ladies and young kids in a campaign to become a parliamentarian or real politician.

So I decided to convert myself in a technical cadre of the political movement.

Steve Grumbine:
00:56:36

That’s really powerful. Thank you, Daniel. I appreciate it so much. All right, Daniel, I want to thank you for being my guest today. Folks, my name’s Steve Grumbine.

I am the host of this podcast, Macro N Cheese. I’m also the founder of the nonprofit that supports this, which is Real Progressives. We are in the United States a 501[c]3 not for profit.

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But in the meantime, we also have on Tuesday nights we have something called Macro N Chill where we take the podcast that you’ve just listened to and we translate that into a video format where we sit down in 15 minute increments and discuss it among people trying to create community, trying to develop new people to understand what we’re talking about. It’s really a great time. It’s every Tuesday night, 8:00pm Eastern Standard Time.

And right now we have on Thursday nights at 8pm we have the RP Book Club and this book club that we’re going through at the moment and this will time out as soon as it’s over, unfortunately is State and Revolution by Vladimir Lenin. For those of you who turn your nose up at learning theory, shame on you. It’s definitely worth the time to dig in and learn.

Without further ado, I bid you adieu.

On behalf of my guest, Daniel Kostzer, and myself, Steve Grumbine, the podcast Macro N Cheese and the nonprofit Real Progressives, we are out of here.

End Credits:
00:59:20

Production, transcripts, graphics, sound engineering, extras, and show notes for Macro N Cheese are done by our volunteer team at Real Progressives, serving in solidarity with the working class since 2015. To become a donor please go to patreon.com/realprogressives, realprogressives.substack.com, or realprogressives.org.