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The Argentine president and why I hope he succeeds

More and more mainstream journalists (maybe we need to retire the term “mainstream” as it begs many questions) are sitting up and taking notice of the Argentinian president, Javier Milei. His openly declared support for radical classical liberalism and “Austrian economics”, for thinkers such as Ludwig von Mises, FA Hayek and Milton Friedman are a breath of fresh air in these increasingly unpleasant, statist times. His package of reform moves, including slashes to the budgets of the Argentinian state, are inevitably attracting criticism and pushback.

This is to be expected. When Ludwig Erhard, the former West German economics minister, put the Deutschemark on a firm footing, ended price controls and cut forms of intervention, the UK occupying authorities, for example, thought he was nuts; when Poland pivoted sharply towards free enterprise in the early 90s, things got tough for a while as a lot of formerly concealed unemployment surfaced. The same happens in many other nations that adopt the “shock therapy” of moving off the morphine drip of cheap money. Imagine, if you will, the likely pain if Venezuela moves away from socialism; the UK had a tough time when Mrs Thatcher enacted reforms in the 1980s, and fashionable opinion thought she was mad and could not succeed.

It seems rather typical of this cycle, then, that Daily Telegraph economics writer Ambrose Evans-Pritchard argues that Argentina is engaged in an “extreme” form of Austrian economics, and argues that it is all going wrong. AEP is a Keyensian; he sometimes writes intelligently but a lot of his predictions are way off base. He’s predicted the crackup of the eurozone so many times that his credibility is shot on that issue. He’s all for Net Zero and the policies to make it happen. But there is more than a grudging respect for Milei here – AEP knows that Argentina’s statist, Peronist culture is awful and needs to change. And AEP does argue that maybe Milei ought to take a leaf out of Erhard’s book on the issue of the currency. Unfortunately, AEP is a full-on fiat currency guy, who presumably agrees with Keynes that gold is a relic, etc.

In any event, people are noticing Argentina now. Its currency and debt is more highly valued; thousands of civil servants have been fired, and Milei is pushing to end a lot of controls. He faces resistance, and may not succeed. But here he is, more than six months into power, and I hope he succeeds. A prosperous, liberal Argentina would be a refreshing contrast not just to the Argentina of many recent decades, but to the horrible regimes of other Latin American states. And who knows – it would be nice if the UK could improve relations with such a country, maybe work out something over the Falklands, and forge closer trade ties with a country that the UK helped to build a century ago.

11 comments to The Argentine president and why I hope he succeeds

  • Sigivald

    Unfortunately, AEP is a full-on fiat currency guy, who presumably agrees with Keynes that gold is a relic, etc.

    IIRC, Mises thought metallism was essentially stale and there was no going back when he wrote The Theory Of Money And Credit (or at least the 1953 update with Part Four).

    There’s nothing wrong with fiat money if you can resist the temptation to make printer go brrt. A steady supply, or even a known and predictable, steady rate of inflation are perfectly compatible with sound economics (and indeed the latter help with psychology by unsticking wages, in practice).

    The difficulty is making it politically preferable to stick with sound money – which is, of course, a problem metallism has often had in the past, with debasement.

    “We’re why we can’t have nice things.”

  • Lee Moore

    These sort of discussions can be overcomplicated. There’s one simple reliable metric for whether a new government is heading in the right direction :

    thousands of civil servants have been fired

  • Paul Marks

    Sigivald – the basic point of fiat money is to hand it out to the politically connected (so they can become wealthy at the expense of everyone else – Cantillon Effect), saying that fiat money is O.K. if the government (and banks) do not increase it, makes it pointless – the reason it is created (without even a printing press now) is to do that.

    It is what fiat money is for.

  • Paul Marks

    The President of Argentina is facing a incredibly difficult task and a world full of enemies – but I agree with Johnathan Pearce, I hope President Milei succeeds.

    And Lee Moore makes a good point – President Milei is not just talking about dismissing “public servants” he is actually doing it.

    To give people some context – the last American President to do this, to actually fire lots of officials, from a peacetime total, was Warren Harding – more than a century ago.

    There is a reason that the international establishment hate the memory of Warren Harding – and the reason for their hatred is nothing to do with adultery or corruption (they do not give a damn about either of those things) – the reason they hate the memory of Warren Harding is that he not only believed in liberty, he tried to put it into practice.

    Releasing political prisoners, and cutting government spending (from a peacetime total) by some 25%. Think about that – for every 4 Dollars the Federal Government spent in 1920 – by 1923 it was spending 3 Dollars (at least so I have been told – others will correct me if I am mistaken).

    President Trump may do the first thing (release political prisoners), but he is not going to cut government spending, not dramatically – not “politically possible” (deep down Donald John Trump is a politician – although he would not say so).

    President Milei does not care what is “politically possible” – he is just going to try to roll back the state, till when and if he is stopped (either by some impeachment – or by a bullet).

  • Paul Marks

    We rightly praise Konrad Adenauer and Ludwig Erhard – but we should also praise Fritz Schaffer, yes he made anti semitic speeches in his youth (and he bitterly regretted doing that) – but his bad words should not mean that he is airbrushed from history.

    Without the strict control of government spending by Fritz Schaffer the free market reforms of Ludwig Erhard could not have succeeded.

  • Brendan Westbridge

    Depends on what you mean by “succeed” of course. Free market policies will deliver the results they are supposed to deliver because free market economics is – as the late Brian Micklethwait pointed out – a statement of fact. The only questions are whether Milei is able to implement free market policies and whether the Argentine electorate are happy with the results.

    On that latter point I seem to remember our own Paul Marks suggesting that Thatcher’s great mistake was not making it as easy as possible to employ people who were made unemployed as uncompetitive enterprises went bust. There was a lot of employment legislation, planning laws and other forms of red tape that got in the way.

  • Dendrocnide

    “Legacy media “ and “legacy journalism “ is more accurate than “ mainstream “.

  • And who knows – it would be nice if the UK could improve relations with such a country, maybe work out something over the Falklands, and forge closer trade ties with a country that the UK helped to build a century ago.

    Before Juan Perón destroyed Argentina it was one of the most economically successful countries in the world, arguably second only to the United States. This was mostly off the back of fresh, frozen and canned meat and other agricultural exports.

    Taxes were reasonable, the Argentinian treasury was flush with cash and there were regular economic surpluses.

    Then Juan Perón came to power and turned it into a madhouse.

  • Paul Marks

    John Galt – there was some decay before General Peron, but it is true that his statism was a disaster

    Yet some Argentines (and others – remember the absurd Musical production “Evita” – whose only complaint was that the statism had not gone far enough, a complaint from the character “Che Guevara” – a psychopath) still revere this “Social Justice” Collectivism – including, I am told, the Gentleman in the Vatican.

  • Mr Ed

    I find musicals utterly unbearable. Every last one, yes I am one of Les Miserables on this point. Give me The Magic Flute, Don Giovanni, The Marriage of Figaro and Cosí fan Tutte or give me death as they say. But on Evita, the key song was originally going to be titled ‘This is your lover returning’ before being changed to the words that show how Evita was using the masses for her own ends, ‘I never loved you‘, I took that as a dig at the Peronists and socialists and politicians generally.

    I have heard Milei speak a lot, in his original Spanish which I speak. As I have said before, no one in power has spoken like him in my lifetime, and he acts in line with his words, (I’m looking at you Melloni) and I have changed a life-long habit of avoiding Argentine wine, not wanting to contribute to the Peronist piss-pots governments, to actively buying some every month. ¡Viva la libertad, carajo!.

  • Paul Marks

    Mr Ed – interesting, perhaps I misunderstood the musical.

    As for the Prime Minister of Italy – Prime Minister Melloni has done some things, for example the lady has ended the (demented) guaranteed income scheme (beloved by “Bleeding Heart Libertarians” – who are not libertarians at all) – but, I agree, the high hopes placed in the lady were not fulfilled.

    Argentina does not get vast amounts of European Union money, but Italy does – and it would be very hard for an Italian leader to survive (as Prime Ministers, unlike Presidents, can be removed on a whim of the votes in Parliament) if they said “stuff your money European Union – we are going to kick out the illegal migrants” (or whatever).

    This financial blackmail was also used on Poland – the Polish people were told (in effect) that they would not get lots of E.U. money unless they voted for Donald Tusk – so they did.

    It was a close election – but a majority of voters voted to undermine their nation in return for money.

    That may be considered brutal language – but it is what happened. They voted for Donald Tusk – and, in return, the E.U. “unfroze” lots of money.

    How many Italians would vote for real independence – for losing all the E.U. Credit Money?

    Argentina had little or none to lose.

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