Even before Javier Milei was elected, numerous media outlets have vilified Milei. At the Financial Times, he is a radical right-winger. For the Left-leaning organization Fairness and Accuracy in Reporting (FAIR), Milei is deemed "really as extreme as you get in right-wing libertarian ideas." One article in Forbes designated him a destroyer. France 24 labels him an "anarcho-capitalist." After reading these articles, it would not shock me if these journalists read my blog and similarly lobbed ad hominem attacks at me.
It is not like Milei is an uneducated idiot. Milei was an economics professor for 20 years and wrote more than 50 academic papers. He was also a chief economist at Máxima AFJP and a senior economist at HSBC Argentina. His style and delivery are more Trump-esque in nature, as is illustrated by Milei using a chainsaw to illustrate how he would cut inflation if elected. However, his policy views widely diverge from Trump. Trump is a nationalist and protectionist who limited immigration and free trade during his four years in office. Milei is a minarchist (i.e., advocates for minimal government) while being influenced by the Austrian school of economics. He certainly has no love for Argentina's central bank.
Last week, Milei sent an omnibus law to the National Congress of Argentina entitled Bases y puntos de partida para la libertad de argentinos (Translation: Basic Law and Starting Points for the Freedom of Argentinians). Admittedly, I have not read the bill yet, but you can view the 183-page bill here if you want to read it. What I can gather is that it entails much deregulation, ranging from the airlines industry and protectionist measures of industries to end price controls and the prohibition on exports. A plurality of these regulations were implemented under the dictator Juan Carlos Ongangía, which says a lot.
The truth of the matter is that Argentina's economy is in disarray, something which I wrote about in 2014 and 2019. The Heritage Foundation's Index of Economic Freedom has Argentina ranked 144 out of 176. Aside from the political interference and poorly functioning judicial system, Argentina ranks so low because it has lots of fiscal spending, price controls, capital controls, and has other regulations to discourage entrepreneurship.
The Cato Institute's Human Freedom Index is no less flattering. This Index looks at both personal freedom and economic freedom. At least for personal freedom, Argentina ranks 38 out of 165, although it would be nice to see improvement in rule of law. This finding on personal freedom lines up with Freedom House's Freedom of the World Index, which fortunately ranks Argentina as "Free" in terms of political and civil liberties. As for economic freedom, we see below that Cato Institute's Index ranks Argentina as one of the most regulated countries in the world.
As the adage goes, "desperate times call for desperate measures." Milei was right to declare a decree of necessity and urgency (Decreto de necesidad y urgencia, DNU) on December 20, 2023. Years of regulations, increased government spending, and printing pesos as if money grew on trees has caught up with Argentina. My theory is that mainstream media outlets are so keen on lambasting Milei because his election and pending reforms undermine the idea that "government knows what is best."
I doubt that I would agree with literally every single one of Milei's proposals. As ideologically similar as I am to him, it is not possible to agree with someone on everything. As happy as I am that Argentina has elected a libertarian president, I am not going to automatically agree with simply because it is Milei's proposal. I will base any policy analysis on the merits of the argument or policy itself, much like I already have with Milei's proposal to dollarize Argentina or being perplexed as to why Milei would raise taxes on grain. I will say that based on what I have seen, Milei is by and large on the right path.
With opposition controlling the majority of the Argentinian Congress, it begs the question of how likely Milei's reforms will pass. However, if successful, I would wager that freer trade, fewer regulations, and less profligate government spending will help make Argentina the economic powerhouse that it once was prior to Juan Perón.
No comments:
Post a Comment