12/10/2024 marked the one-year anniversary of the election of Javier Milei as President of Argentina marking an end to failed socialist decades long rule.
Javier Milei on Socialism
“Argentina has been in decline for more than 100 years as a consequence of embracing ever-increasing doses of socialism … What I define as the basis of decline is what I calI the caste model. The caste model says that where there is a need, a right is born. But the problem is that needs are infinite and rights have to be paid for by someone, and resources are finite.
This conflict between infinite needs and finite resources is solved by economics with private property and a price system. But politicians do not like the idea of the invisible hand. They believe in the claw of the state and solve it by means of a nefarious slogan whjch is the idea of social justice.’
– Javier Milei, September 7 2023
Milei was elected promising changes that would return Argentina to the classical liberalism that made it one of the richest countries in the world a century ago. He has achieved much more than most people thought possible in such a short period of time. In his first 30 days in office, he cut the number of government ministries from 18 to 9.
I believe Milei’s first year holds lessons for the US and the world.
When Milei assumed the presidency, Argentina was in bad straits. This crisis was the result of 20 years of Peronist rule and 80 years of a corporatist economic and a political system.
Milei inherited a country with 200% inflation in 2023, 40% poverty, a fiscal and quasi-fiscal deficit of 15% of GDP, huge and growing public debt, a bankrupt central bank, and a shrinking economy.
Again, from the Economist: “The left detests him and the Trumpian right embraces him, but he truly belongs to neither group. Mr. Milei believes in free trade and free markets, not protectionism; fiscal discipline, not reckless borrowing; and, instead of spinning popular fantasies, brutal public truth-telling.”
During the campaign, Milei told Argentines they would feel pain before the economy would improve, but there is no better path than thorough reform. The government immediately stopped spending more than it had, and the central bank stopped printing money. Milei cut spending by 30% and produced a fiscal surplus after his first month in office. Monthly inflation fell from 25% in December last year to 2.7% in October.
Hundreds of deregulations began with a mega-decree last December and the creation of the Ministry of Deregulation in July. Milei has issued some 672 regulatory reforms. That’s 1.84 reforms per day.
Argentina still has a closed economy with barriers to trade and tight capital and exchange controls. Milei wants to open the economy once it stabilizes further and only then dollarize it and abolish the central bank.
The changes Milei has initiated have not only been economic and structural, but also cultural.
Milei has promoted a shift in mentality away from the socialist and statist ideals that created the Argentine crisis and toward one that is supportive of civil society and the principles on which it relies, including tolerance, equality before the law, freedom, and individual responsibility.
Image from: https://en.wikipedia.org/wiki/Javier_Milei
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