The specifics of Argentina gave Milei his opening. But this is just one of a number of political earthquakes of the last few years.
Interpreting in a global context is as important now as for the events in a number of countries in 1848, 1968, or 1989-1991. We are at one of those hinge-points in history.
The common thread is that the national "expert" and "elite" classes have been discredited the world over. Milei is showing a libertarian response. Others are offering more nationalist and authoritarian responses.
I hope Milei succeeds and inspires imitation, because some of the other possibilities are darker. The only certainty is that status quo structures are going to be destroyed and replaced in a major way.
Not having support in the legislature for truly radical libertarian measures is a problem, but it should be kept in mind that metastasizing interventionist/welfarist hellscapes rely a great deal on discretionary powers over rule-making being delegated from legislatures to executive branch bureaucrats. Even if the legislature is totally uncooperative, unilaterally slashing the bureaucracy and exercising Presidential discretion in the direction of junking the rules can do a lot to free up an economy.
Likewise, one shouldn't underestimate the power of a radical libertarian ideology that has fired the imaginations of young people who now realize that they have no future in becoming compliant minions or tame clients of the state's ruling class. Even if that doesn't translate into more legislative seats for La Libertad Avanza (welfarist/bureaucratic patronage and special interest privilege-mongering naturally being perennial enemies of pro-liberty political movements in traditional democratic contexts), it does mean going forward that many Argentinians are now much more inclined to ignore or even openly defy orders coming from statist control freaks. Recall the shining examples of how the former socialist regimes in Eastern Europe peacefully fell almost without a shot being fired (apart from the Romanian dictator being dispatched with extreme prejudice after his security services killed some demonstrators)--once a people are fed up with a regime ready to reclaim their liberty, there is little the statists can do to keep the people from tearing down the walls that imprison them.
Just to add: Don't discount the peer effects. Were other countries to see the positive effects of Milei's bold reforms and push in that direction, Argentina might not be the only beneficiary of his free-market policies.
Decent puff piece for the masses but I would have left out the word libertarian as I think that instantly dooms any chance at publication. Besides I've seen no evidence he's a libertarian at all, just a free marketeer and while sure no true Scotsman, when he fails, as he will, libertarianism will get the blame for generations to come with worldwide detractors using it as an example hence why associate him with something he's not to it's detriment.
Optimism: During Milei’s term in office regulations will not get worse. Entrepreneurs can work around lots bad rules as long as they see stability for the future.
Pessimism: Four years is not enough time to establish a business without fear that the next administration will take it away.
"In 1910, the average American was only 25% richer than the average Argentine.[i] Now it’s about 400%."
I think it's a bad idea to expect Argentina to go back in time and achieve anything close to that 75% (*). The causes for Argentina's previous wealth are no longer there:
Milei won against opponents already among the most liberal (the actual sense of the world, as I am frustrated to have to stress to Americans) candidates in Argentine history, including Peronist Massa. His radicalism was so tangible that even some serious news sources, with no apparent irony, compared him to Trump, whose policy stances are exactly the opposite in any way I can think of and who stands out because of his absolute lack of understanding of economics, whereas Milei is one of the very few who understands it in Latin American history.
What else does Argentina need less than even more of the radicalism that has haunted it for all of its existence?
Then I realised Argentina has already tried reasonable gradualist liberalism twice in three decades. The first created an unprecedented disaster, the second achieved almost nothing (Macri not to be confused with Macron). So perhaps only a rabble rouser had a chance of getting anything done.
Then I looked at what he is actually doing. Devaluing the desastrous official exchange rate stopped short of the radicalism that would cause chaos. His afuera theater started with the cases so egregiously corrupt and regressive that no sane person could oppose it save from the few dozen people making huge rents. He picked the areas where the benefits would be quick and tangible, such as much lower air fares and internet connection prices. And he doubled social spending on the poor using the savings. He courted investors for whom otherwise the risks of investing in anything creating employment would be untenable for years to come. He even stepped back from the insanity of his peremptory rejection of any links to China and Brazil.
And the most cringeworthy part of his radicalism, his reactionary social conservatism is nowhere to be seen.
In fact he is only doing what Bullrich would have done anyway had she prevailed, and now has secured the support of the whole right wing and even parts of the poor electorate which a year ago found anything but Peronist fascism (though they switched the label to socialism). He might even actually manage to win over parliament.
Was his rabble rousing just a political game? If so, that was an Oscar worthy performance. Even so keeping it up throughout years of inevitable harm until anything truly valuable becomes close to bankable and more years for those effects to take root, will require more than that. Hard to imagine, but actually imaginable…
For any Italian or Spanish speakers, I recommend the Youtube conversation out yesterday among Michele Boldrin (Washington University, St Louis), Pablo Guidotti and Andy Neumeyer (both from Torcuato Di Tella University, Buenos Aires).
> To stop inflation, you must stop printing money and fix the budget at the same time.
Mises says that price rises from inflating "money" is less destructive than the resulting shift from market-directed production to politics-directed production. Does anyone know about this?
The specifics of Argentina gave Milei his opening. But this is just one of a number of political earthquakes of the last few years.
Interpreting in a global context is as important now as for the events in a number of countries in 1848, 1968, or 1989-1991. We are at one of those hinge-points in history.
The common thread is that the national "expert" and "elite" classes have been discredited the world over. Milei is showing a libertarian response. Others are offering more nationalist and authoritarian responses.
I hope Milei succeeds and inspires imitation, because some of the other possibilities are darker. The only certainty is that status quo structures are going to be destroyed and replaced in a major way.
Not having support in the legislature for truly radical libertarian measures is a problem, but it should be kept in mind that metastasizing interventionist/welfarist hellscapes rely a great deal on discretionary powers over rule-making being delegated from legislatures to executive branch bureaucrats. Even if the legislature is totally uncooperative, unilaterally slashing the bureaucracy and exercising Presidential discretion in the direction of junking the rules can do a lot to free up an economy.
Likewise, one shouldn't underestimate the power of a radical libertarian ideology that has fired the imaginations of young people who now realize that they have no future in becoming compliant minions or tame clients of the state's ruling class. Even if that doesn't translate into more legislative seats for La Libertad Avanza (welfarist/bureaucratic patronage and special interest privilege-mongering naturally being perennial enemies of pro-liberty political movements in traditional democratic contexts), it does mean going forward that many Argentinians are now much more inclined to ignore or even openly defy orders coming from statist control freaks. Recall the shining examples of how the former socialist regimes in Eastern Europe peacefully fell almost without a shot being fired (apart from the Romanian dictator being dispatched with extreme prejudice after his security services killed some demonstrators)--once a people are fed up with a regime ready to reclaim their liberty, there is little the statists can do to keep the people from tearing down the walls that imprison them.
Just to add: Don't discount the peer effects. Were other countries to see the positive effects of Milei's bold reforms and push in that direction, Argentina might not be the only beneficiary of his free-market policies.
See this piece I wrote last week: https://www.ourlongwalk.com/p/in-search-of-south-africas-javier
I like Milei and I hope he success, but I’ve learned to never underestimate the propensity of South American countries to underwhelm and underperform.
Just when you think things may finally be turning around - populists, socialists, and kleptocrats will come out of the woodwork to spoil it all again.
How can Argentina avoid the problems that occurred with the “shock therapy” in the former Soviet bloc?
Decent puff piece for the masses but I would have left out the word libertarian as I think that instantly dooms any chance at publication. Besides I've seen no evidence he's a libertarian at all, just a free marketeer and while sure no true Scotsman, when he fails, as he will, libertarianism will get the blame for generations to come with worldwide detractors using it as an example hence why associate him with something he's not to it's detriment.
Optimism: During Milei’s term in office regulations will not get worse. Entrepreneurs can work around lots bad rules as long as they see stability for the future.
Pessimism: Four years is not enough time to establish a business without fear that the next administration will take it away.
"In 1910, the average American was only 25% richer than the average Argentine.[i] Now it’s about 400%."
I think it's a bad idea to expect Argentina to go back in time and achieve anything close to that 75% (*). The causes for Argentina's previous wealth are no longer there:
https://www.mangosorbananas.com/p/why-argentina-is-not-rich
https://www.mangosorbananas.com/p/why-argentina-is-not-rich-not-enough
(*) And it was more like 62%, not 75%.
"The New York Times invited me to write this op-ed on Milei’s Argentina, but decided to go in another direction"
They went with a late stage candidate.
Milei won against opponents already among the most liberal (the actual sense of the world, as I am frustrated to have to stress to Americans) candidates in Argentine history, including Peronist Massa. His radicalism was so tangible that even some serious news sources, with no apparent irony, compared him to Trump, whose policy stances are exactly the opposite in any way I can think of and who stands out because of his absolute lack of understanding of economics, whereas Milei is one of the very few who understands it in Latin American history.
What else does Argentina need less than even more of the radicalism that has haunted it for all of its existence?
Then I realised Argentina has already tried reasonable gradualist liberalism twice in three decades. The first created an unprecedented disaster, the second achieved almost nothing (Macri not to be confused with Macron). So perhaps only a rabble rouser had a chance of getting anything done.
Then I looked at what he is actually doing. Devaluing the desastrous official exchange rate stopped short of the radicalism that would cause chaos. His afuera theater started with the cases so egregiously corrupt and regressive that no sane person could oppose it save from the few dozen people making huge rents. He picked the areas where the benefits would be quick and tangible, such as much lower air fares and internet connection prices. And he doubled social spending on the poor using the savings. He courted investors for whom otherwise the risks of investing in anything creating employment would be untenable for years to come. He even stepped back from the insanity of his peremptory rejection of any links to China and Brazil.
And the most cringeworthy part of his radicalism, his reactionary social conservatism is nowhere to be seen.
In fact he is only doing what Bullrich would have done anyway had she prevailed, and now has secured the support of the whole right wing and even parts of the poor electorate which a year ago found anything but Peronist fascism (though they switched the label to socialism). He might even actually manage to win over parliament.
Was his rabble rousing just a political game? If so, that was an Oscar worthy performance. Even so keeping it up throughout years of inevitable harm until anything truly valuable becomes close to bankable and more years for those effects to take root, will require more than that. Hard to imagine, but actually imaginable…
For any Italian or Spanish speakers, I recommend the Youtube conversation out yesterday among Michele Boldrin (Washington University, St Louis), Pablo Guidotti and Andy Neumeyer (both from Torcuato Di Tella University, Buenos Aires).
The links to the endnotes don't seem to work.
> To stop inflation, you must stop printing money and fix the budget at the same time.
Mises says that price rises from inflating "money" is less destructive than the resulting shift from market-directed production to politics-directed production. Does anyone know about this?
Argentina is a country with rich natural resources and a lot of human capital, what is the optimistic scenario where Milei makes progress?
Nice piece.