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There are many witty jokes in economics, but there is one: there are only three other economic systems: capitalism, socialism, and Argentina.
The country was among the richest in the world at the beginning of the 20th century, beginning to catch up with the United States as an emerging global power. For a hundred years, this has been synonymous with economic mismanagement. The election of radical libertarian Javier Milei may just begin to replace that.
Of course, Milei will be vilified by the liberal left as “far right,” even if he has nothing of the sort, and will face enormous opposition from the IMF, the World Bank, and Davos supporters, all of whom are committed to the wonderful state, an orthodoxy of maximum regulation. And yet, there is a chance that it could turn the tide toward liberal, free-market reforms. The global economy can gain advantages right now.
In the end, the vote wasn’t even close. In this weekend’s runoff election, radical free-market libertarian Milei defeated his Peronist opponent Sergio Massa. Next month, he will be named president of Argentina.
This is not an enviable task. This year, the country’s inflation rate has reached 143 percent. He issued cash like crazy to finance massive social spending. The currency is in free fall, with the peso collapsing to 357 per US dollar, from 164 a year ago (and down only 38 percent). Five years ago). He has created emergency aid in the face of a new default on IMF loans. It is a disaster. In this context, it is not surprising that the country voted for radical change.
Milei is indeed that. An outspoken TV host, former lead singer of a Rolling Stones tribute band and occasional tantric sex coach, he’s far from conventional.
Describing himself as an “anarcho-capitalist,” he promised to use a “chainsaw” opposed to the state, making plans to reduce the percentage of GDP spent on government by 15 percent, abandon the peso altogether, and use the dollar as the country’s currency. currency. Instead, abolish the central bank, cut protections for hard work, and cut taxes.
Think Kwasi Kwarteng on roller skates. Make it a real adventure.
Argentina’s new president is described as “far-right” by the mainstream media. In reality, this is not the case.
Possibly he would be an extremist, but only because he is a staunch libertarian, who has no time to let the state run anything. It’s seeing something “far-right” in any of their policies.
The peso has not been a very successful currency, and getting rid of it would not deserve to be more “right-wing” than replacing the franc or the lira with the euro; This would possibly be more difficult to achieve.
With interest rates at 133%, it’s hard to argue that Argentina’s central bank has been a great success, or that there’s something “fascist” about replacing it. In fact, his Peronist opponent as finance minister eliminated the source of income taxes for almost all staff. in September, a move that could well be described as “right-wing” or “populist”.
And Milei might surprise us all. Its most complicated task so far will be to “dollarize” the economy without enough U. S. currency to circulate. You would possibly end up with an anchor, or just use Bitcoin instead. However, if it succeeds, it will stabilize inflation much more. more effectively than what the central bank has done. The rest of his proposals make a lot of sense.
Argentina’s inflated state will have to be reduced, the subsidy network will have to be abandoned, price lists will have to be abandoned, markets will have to be opened, crony capitalism will have to be dismantled, and the country’s abundant herbal resources will have to be reduced. The world’s second-largest shale gas fields in Patagonia could be used to create an energy boom if they develop well.
Of course, you will face a lot of opposition. Officials and state semi-monopolies will block it as soon as they can. The IMF, which has acquiesced to the generous spending of the Peronists, will oppose it, as will the World Bank and the rest of the Davos establishment.
Milei may find himself toppled in the money markets and, in fact, the IMF will not come to his rescue, nor will Biden’s administration in Washington. His presidency may also end up being a resounding failure. And yet, Argentina is a naturally wealthy country with abundant land and resources. It probably wouldn’t be too complicated for your prospects.
The really compelling question is: could it spark a global return to liberal free-market reforms? Argentina is not the country one would choose to live a daring experience. He failed again and again, and no matter the occasion, he discovered a new way to declare bankruptcy. And yet, the bar is so low that it may not be necessary to improve much to start looking for a much healthier life.
Over the past two decades, the trend has been in favor of large states, reasonable cash, and overly regulated economies. This has been true in the U. S. The US under Obama and Biden, the EU and, of course, the UK as well. As they got bigger, taxes went up and central banks released more and more cash to pay for everything. In Argentina, the effects of those policies have been disastrous and, over time, will be disastrous in the rest of the world as they move forward. Well.
If Milei only modestly succeeds in turning around the country’s fortunes, stabilizing prices, lightening the state, and beginning to raise living standards, it would possibly mark the moment when the tide has begun to turn toward the flexible market (and Argentina, surprisingly, will be the country leading the way.
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