Argentina’s Javier Milei was considered a lunatic and a threat to democracy. The people didn’t care. With inflation soaring through the roof at 300 percent and over 40 percent of the population in poverty, the Argentina electorate saw what leftist economic policy had yielded. They elected Milei, a Trump-like candidate who wielded chainsaws at political rallies, to right the ship. And he’s succeeding in that endeavor. Inflation has dropped to 11 percent, and the country posted its first modest surplus since 2008 (via The Telegraph):
First, what’s changed in the country: inflation has fallen to 11pc and Milei predicts it will fall further. While a monthly figure (this is Argentina after all), price rises may be coming back under control after soaring above 300pc annually.
Last week, Milei announced that the country had recorded its first quarterly budget surplus since 2008, a modest 0.2pc of GDP, but still an astonishing achievement in such a short space of time, especially for a country that has run deficits for 113 of the last 123 years.
Then, earlier this week, the central bank, which Milei has not yet gotten around to abolishing as he pledged, cut interest rates for the third time in three weeks. While they are still at an eye-watering 50pc, that will start to feed through into the economy very soon. Investors have started to notice.
According to Bloomberg data, in the blue-chip swap market the peso was the best-performing currency in the world in the first quarter of this year, and the bond markets are rallying as well.
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So how is he en route to deliver such a massive shock to the stale economic orthodoxy? Fundamentally, he got three big calls right.
First, even without a majority in parliament, he has been ruthless. Whole government departments have been closed down overnight, regardless of the immediate consequences. The Ministry of Culture was axed, so was the anti-discrimination agency, and the state-owned news service. Only last month, he unveiled plans to fire another 70,000 state employees.
Milei hasn’t attempted to cut gradually, to control budgets, or to ease people out with early retirement, or hiring freezes. Instead, he has, as promised, taken a ‘chainsaw’ to the machinery of the state, yielding huge savings in the process.
Next, he has been bold. The president massively devalued the peso on day one, taking the financial hit upfront, and then tore up rent controls, price restrictions and state subsidies. He pared back workers’ rights, reducing maternity leave and severance compensation, and allowed companies to fire workers who went on strike.
The article added that if Argentina can maximize tapping into the nation’s vast oil and gas reserves through technologies we use here in the United States, an economic renaissance could be upon the South American nation.
Stephen Green at PJ Media said Milei’s governing style is something Republicans should aspire to channel:
Free markets work. Who'd a thunk it?
There has not as yet been anything like an authoritarian crackdown on dissent. No journalists have heard that midnight knock on the door, and no communists have been treated to free helicopter rides.
Can Milei last? More importantly, will his reforms continue? There's just no way to know. This is Argentina, after all, and political stability has never been the country's strong suit. Voters might look at a successful period of free-market reforms and decide that the next election would be the perfect time to finally go Full Soviet.
In the meantime, Milei's results speak for themselves. There's a lesson there for any Republican bold enough to learn it.
Milei is making Argentina great again. Now, if only we can do that here come November.
H/T VodkaPundit
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