LIBERTARIAN ECONOMIC PRINCIPLES PROVE THEMSELVES-ARGENTINA

Many people in America hope that the new Trump administration will take an axe to a bloated and overbearing government, cutting spending and rolling back regulation. Whether this goal is even plausible any more is a crucial question for America and the world, after two decades in which government debt globally has risen relentlessly, fuelled by the financial crisis of 2007-09 and the pandemic. For an answer, and a case study of taming an out-of-control Leviathan, head 5,000 miles south from Washington, where an extraordinary experiment is under way.

Javier Milei has been president of Argentina for a year. He campaigned wielding a chainsaw, but his economic programme is serious and one of the most radical doses of free-market medicine since Thatcherism. It comes with risks, if only because of Argentina’s history of instability and Mr Milei’s explosive personality. But the lessons are striking, too.

The left detests him and the Trumpian right embraces him, but he truly belongs to neither group. He has shown that the continual expansion of the state is not inevitable. And he is a principled rebuke to opportunistic populism, of the sort practised by Donald Trump. Mr Milei believes in free trade and free markets, not protectionism; fiscal discipline, not reckless borrowing; and, instead of spinning popular fantasies, brutal public truth-telling.

https://www.economist.com/leaders/2024/11/28/javier-milei-my-contempt-for-the-state-is-infinite?utm_campaign=a.the-economist-this-week&utm_medium=email.internal-newsletter.np&utm_source=salesforce-marketing-cloud&utm_term=11/28/2024&utm_id=2018674

Milei is NOT Libertarian in his foreign policy, nor have many drug policies changed yet.

Last fall, Milei eliminated what The Wall Street Journal termed one of the world's "strictest" rent-control laws. Per its report: "The Argentine capital is undergoing a rental-market boom. Landlords are rushing to put their properties back on the market, with Buenos Aires rental supplies increasing by over 170 percent. While rents are still up in nominal terms, many renters are getting better deals than ever, with a 40 percent decline in the real price of rental properties when adjusted for inflation."

https://reason.com/2024/10/11/argentina-ended-rent-control-guess-what-happened-next/

 Those of us who oppose such controls have for years pointed to reams of economic evidence proving that rent control reduces the amount of overall housing (by 15 percent in San Francisco, according to federal research) and reduces the quality of housing. While it reduces rent for some tenants, it creates scarcity in the housing market and dramatically increases prices for available units. 

 Argentine President Javier Milei has taken steps to reduce inflation in the country, including:

• Cutting spendingMilei has cut spending on construction, education, cultural centers, and energy subsidies. He also reduced consumer subsidies and froze spending on some government advertising and contracts.  
• Devaluing the pesoMilei devalued the Argentine peso by 54% to put the exchange rate closer to the market's valuation.  
• Decreasing tariffs  Economy Minister Luis Caputo announced it would lower a levy known as the PAIS tax on imports from 17.5% to 7.5%. The Milei administration actually increased the tax after taking office Dec. 10 in an effort to boost federal revenues and close a fiscal deficit, but the higher tariff has elevated prices on imports. .  
• Prohibiting central bank financingMilei has prohibited the central bank from financing the fiscal deficit.  

These measures are part of Milei's "economic shock therapy" plan to address Argentina's economic crisis. The International Monetary Fund (IMF) has called the measures "bold" and said they will help create an environment for private sector growth.  While inflation has come down, some say that the measures have brought short-term pain and squeezed families. Others question whether there are adequate safety nets for the poorest Argentines.