What America Can Learn from Argentina's Struggle

And Javier Milei's Plans to Save Argentina

Jun 27, 2024

Hi friends,

I’ve been fascinated by the story of Argentina and Javier Milei. I’ve gathered many articles, posts, and quotes about this evolving story. Below is kind of a synopsis. At the bottom I’ve included some sources. There are plenty of details available if you are as interested as I.

The main reason I’m interested is because of where the U.S. is politically and economically.

Political dynamics around the debt ceiling and fiscal policy are critical. While not as severe as in Argentina, I’m sure you’re aware that there is significant division, as well as significant social tensions, particularly related to ‘woke’ policies like racial justice, Diversity, Equity and Inclusion (DEI), and some of the larger issues of the upcoming presidential election (the southern border, abortion, transgender, election security). I could name another dozen, and I bet you could too.

U.S. econimic health is generally strong, but there are big concerns including high and potential worsening inflation due to government mis-management (at all levels). For a real wake-up call, see the U.S. Debt Clock. Our debt - yes, yours and mine - is over $34 trillion and rising at $100,000 about every 2 seconds!

A Course Correction is Needed:

Comparative Analysis: U.S. and Argentina's Economic and Political Trajectories:
The United States appears to be on a trajectory similar to that of Argentina in recent years, characterized by high debt, inflation concerns, political polarization, and social unrest. To avoid the severe economic and social consequences experienced by Argentina, the U.S. must undertake a crucial course correction. This involves implementing sustainable fiscal policies, addressing equal treatment under the law (not just for individuals but Attorneys General must enforce laws), and fostering political cooperation to ensure stable governance. Proactive measures are essential to steer the country away from potential economic disaster and social upheaval, and to bring back prosperity and stability.

By learning from Argentina's trials and tribulations, the United States can develop a more resilient economic framework and maintain its global economic leadership. Failure to address these issues could lead to a repeat of the economic and social challenges that have beset Argentina, underscoring the urgent need for a comprehensive and urgent approach to national governance and economic policy.

In light of the the political divide and, with the upcoming presidential election, some expect to see the return of high levels of social unrest and ‘mostly peaceful’ protests. Also, the media is a big bully and trouble-maker. Here’s a reminder of the ‘Summer of Love’ 2020.

So, you can tell that my interest in Argentina is not just curiousity; there’s way too close a correlation to our beloved America.

For a taste of Milei’s governing priorities and his political demeanor, I think his speech at the World Economic Forum (WEF) is well worth watching. (23 minutes)

Report on Javier Milei's Political Actions and Impact Since Election

August 2023

Primary Elections: Javier Milei secures approximately 30.5% of the vote, establishing himself as a leading candidate for the presidency. His platform focused on radical libertarian and free-market reforms.

September 2023

Media Appearance: Milei's interview with Tucker Carlson gains significant attention. He criticizes socialism, labeling it as violent and impoverishing, and emphasizes the dangers of gradual socialist policies using the "boiling frog" metaphor.

November 2023

Presidential Election Victory: Milei wins the presidential election with nearly 56% of the vote, marking a significant political shift in Argentina.
Central Bank Closure Plan: Milei announces his intent to shut down Argentina’s central bank, calling it a "non-negotiable matter."

December 2023

Omnibus Law Proposal: Milei introduces a comprehensive law to deregulate the economy, privatize state companies, modify pension systems, change the electoral system, and toughen police actions.
Deregulation and Austerity: Proposals to privatize public entities like Banco Nación, YPF, and Aerolíneas Argentinas are made. He announces plans to cut public spending by up to 15% of GDP, eliminate the central bank, and adopt the US dollar as the national currency.
Economic Measures: Implementation of strict budgetary discipline and austerity measures results in reduced state subsidies and public spending.

January 2024

Inflation Control: Reduction of inflation from around 25% to 13.2%, though poverty rates rise significantly.
Labor Reforms: The Argentine Labor Court halts Milei’s sweeping labor reforms due to legal challenges from labor unions.
Davos Speech: Milei speaks at Davos, criticizing global socialism and advocating for free-market capitalism and Western values.

February 2024

Omnibus Law Approval: The Argentine Congress approves Milei's Omnibus Law amid significant opposition and public protests.
Public Protests: Large-scale protests erupt in response to radical economic changes and austerity measures.
Deficit Reduction: Milei balances a budget previously projected at 5% of GDP, achieving a surplus by cutting central government agency budgets by 50% and slashing crony contracts.

March 2024

Societal Impact: Rising poverty rates with child poverty expected to reach 70% despite slowing inflation.
Cabinet Restructuring: Reduction of the number of ministries, including the elimination of the Ministries of Health and Education.
Gender Language Ban: Argentina bans "gender inclusive language" in official government documents, signaling a shift in cultural policies.
State of the Union Address: Milei addresses Congress, emphasizing the need to reduce the state's size and proposing a 10-point plan known as the ‘Pacto del 25 de Mayo’ to promote economic freedom.

April 2024

First Fiscal Surplus: Argentina achieves its first quarterly fiscal surplus since 2008. Milei attributes this to fiscal discipline and promises to return excess state funds to Argentines through tax reductions.
Inflation and Economic Improvements: Continued reduction in inflation and stabilization of the Argentine peso. Financial markets respond positively, with Argentine bonds rising and the country’s risk index dropping.

May 2024

Shift in Foreign Policy: Argentina under Milei shifts defense cooperation back towards the United States, moving away from closer ties with China established by the previous administration.
Economic Performance: Argentina’s inflation falls to 11% monthly, and the peso becomes the best-performing currency in Q1. The country runs a budget surplus for the first time since 2008.

Summary of Economic Indicators (August 2023 - May 2024)

Inflation: Reduced from 35.4% in August 2023 to 8.7% in May 2024.
GDP Growth: Improved from -2.5% in August 2023 to 2.0% in May 2024.
Unemployment: Slight increase from 12.0% in August 2023 to 13.6% in May 2024.
Poverty Rate: Increased from 45.0% in August 2023 to 60.0% in May 2024.

Graphs/Charts Analysis

Inflation Rate Graph: Displays a significant decrease in monthly inflation rates, showcasing the impact of Milei’s economic policies.
GDP Growth Chart: Illustrates the gradual improvement in Argentina's economic growth, reflecting the effects of deregulation and fiscal discipline.
Unemployment and Poverty Graph: Highlights the rise in unemployment and poverty rates despite economic growth, indicating the social challenges of Milei’s austerity measures.

Positive Aspects of Javier Milei's Presidency

Inflation Reduction: Milei's strict budgetary discipline has led to a significant decrease in inflation rates, dropping from around 25% in December to 13.2% in February 2024. Projections suggest further declines, potentially reaching as low as 7% by July 2024 (DW).
Fiscal Surplus: For the first time since 2008, Argentina has reported a quarterly fiscal surplus, which Milei attributes to his government's rigorous spending cuts and economic reforms (Al Jazeera).
Market Confidence: Argentine shares and bonds have seen sharp increases in value, indicating rising investor confidence. This financial market boost is partly due to Milei's commitment to reducing the fiscal deficit and implementing market-friendly policies (DW).

Negative Aspects of Javier Milei's Presidency

Rising Poverty: Despite slowing inflation, poverty rates have surged. The Social Observatory of the Catholic University (UCA) reported an increase in poverty from 45% to 57%, with child poverty rates expected to rise from 62% to 70% (DW).
Public Backlash: Milei's severe austerity measures, including significant cuts to public education and other social services, have led to widespread protests and strikes. The education budget cut by 71% has been particularly contentious, with large-scale demonstrations and opposition from students, professors, and unions (Al Jazeera).
Political Instability: Milei's aggressive political style has resulted in significant domestic and international controversies. His confrontations with unions and political opponents, as well as diplomatic disputes (e.g., with Spain), have added to the overall instability (Al Jazeera) (MercoPress).

If Milei's long-term economic reforms are successful, Argentina could achieve sustainable growth and reduced poverty levels. Successful reforms could transform the economic landscape, leading to broader prosperity. If his government adapts and includes social safety nets, the country could see significant improvements. Javier Milei's tenure has been marked by radical economic reforms, significant political changes, and cultural shifts. His policies have resulted in a notable reduction in inflation and a stabilization of the currency, but also an increase in poverty and unemployment, sparking widespread public protests and legal challenges. The long-term success of Milei's policies depends heavily on their implementation and the global economic environment as Argentina navigates these transformative changes.

If you want to follow a rabbit trail that I traveled with AI, click here.

Joel Bowman has several good Substack posts on Milei and Argentina too.

Sources: https://ifapray.org/blog/argentina-reverses-300-socialist-laws/, https://tuckercarlson.com/javier-milei/, https://americanpolicy.org/2023/11/26/setting-the-agenda-for-freedoms-comeback/, Milei’s First One Hundred Days: An Assessment, https://www.reuters.com/world/americas/argentinas-milei-says-shutting-central-bank-non-negotiable-2023-11-24/, https://mises.org/power-market/javier-milei-and-battle-davos, Milei, Argentina and the Watching World, https://mises.org/mises-wire/javier-milei-ended-dc-sized-deficit-innine-weeks, https://mises.org/mises-wire/javier-milei-vs-status-quo, https://www.telegraph.co.uk/business/2024/05/04/argentina-javier-milei-proving-left-wing-economy-wrong/, https://pjmedia.com/vodkapundit/2024/05/09/milei-is-absolutely-killing-it-in-argentina-n4928888?utm_source=substack&utm_medium=email. Also, I used Chat GPT for summation and chart explanations.

“Argentina has all the conditions to be the new mecca of the West.”
~ Javier Milei (May 2024)

“Every peso left over to the state will not be used to increase public spending, it will be returned to Argentines through tax reductions.”
~ Javier Milei, 2024

VoteTexas.gov, https://www.votetexas.gov/get-involved/index.html

Until next time…

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Realism from an American Conservative