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Thursday, January 30, 2025

Assessing Javier Milei, the World’s Best Leader: Part VIII

January 29, 2025 by Dan Mitchell @ International Liberty

I wrote a few weeks ago about how 108 leftist economists, including  Thomas Piketty and Gabriel Zucman, were wildly wrong when they warned in 2023 that Javier Milei’s agenda would be “very harmful for the Argentine economy.”

This new video from John Stossel is further evidence of their ideological blindness.

I’m not surprised that Milei’s policies are working, of course, but I am surprised about how quickly we are seeing good results.

…these numbers are much better than I would have predicted. Milei is making radical changes and people losing government jobs and/or welfare benefits won’t necessarily have immediate success transitioning to the productive sector of the economy. Especially since there’s also usually some short-run pain when an economy is weaned off the sugar high of easy money and inflation. So I expected at least one year of bad economic news from Argentina before a rebound. Yet it seems the good news is already beginning to materialize.

Today, let’s look at more good news.

We’ll start with this tweet summarizing some of the positive outcomes.

There’s even more evidence that investors are happy.

Here are some excerpts from a Reuters story by Walter Bianchi.

Argentina’s closely-watched country risk index, a reflection of how investors view the country’s debt, broke below a key level of 1,000 basis points on Friday, the lowest in at least four years as markets cheer libertarian President Javier Milei. …The new government has dramatically cut state spending, overturning a deep fiscal deficit, focused on rebuilding depleted foreign reserves, turned off the taps of new money supply and managed to temper triple-digit inflation. That’s gone down well with investors…while the long-embattled peso currency has strengthened.

Here’s a chart from the story showing the progress since Milei took office.

Many of my left-leaning friends won’t be impressed by good news from investors and for investors.

They will ask about poor people.

So they should be very happy about these passages from a report in the Buenos Aires Times.


With inflation tumbling from a peak of a monthly 25.5 percent and wages recovering some of the lost ground, the number of poor people had been reduced to as low as 36.8 percent by the end of the second half of last year… The data stem from the rigourous measurements by the economist and Universidad Torcuato Di Tella (UTDT) lecturer Martín González-Rozada.

The specialist estimated December’s Total Basic Shopping-Basket, calculating a reduction of poverty by 16.1 percentage points from its peak. …This situation propitiated a fall in the calculations of poverty and destitution for the last six months of last year, descending to 36.8 and 9.2 percent respectively with the number of destitute almost halved.

Even the Washington Post has noticed the good news, as indicated by these excerpts from a column by Ian Birrell.

 

The self-styled “anarcho-capitalist,” who campaigned with a chainsaw as a symbol of his desire to slash the bloated state and free the economy, has embarked upon a messianic mission to salvage his stagnant nation. Carried unexpectedly to power on a wave of public contempt for failed politicians and a corrupt elite, Milei is trying to unleash, in a statist society, a libertarian revolution that one aide described to me as “turbocharged Thatcherism.” …

This mercurial loner…is engaged in a high-risk gamble: to shake his country out of its decades-long stupor by slashing subsidies, sacking public servants, scrapping taxes, shutting ministries, ripping up regulations and privatizing scores of state enterprises from airlines and banks to football clubs and waterways. …Milei can point to significant successes in curbing the curse of inflation and shrinking the state…

Milei…has retained his popularity and has the support of about half the electorate, with an uptick in his ratings this fall. Much of his backing comes from fed-up younger voters, who flocked last year to support him and his exuberantly populist message of change. …“He has overachieved anybody’s expectations,” said one insider.

I’ll close by observing that I worry the news from Argentina may be too good. I want a recovery based entirely on fundamentals rather than investor confidence.

That being said, I’m sure Milei has things pointed in the right direction. Much more needs to happen, to be sure, but if he continues to make progress, there’s every reason to think that Argentina once again can be one of the world’s freest and richest nations.

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