Doral, Florida - Last year your columnist thought that the tide was starting to turn on the political spectrum, and that the conservative/ libertarian/ classical liberal side was due for a comeback this year and next. See: https://miamiindependent.com/conservative-rebound-may-reach-argentina-next-year/. The last time that happened was 2016, with Brexit in the spring and Trump’s election in the fall.
Since then, however, the left has struck back with a barrage of hoaxes: (1) Russia collusion; (2) the response to the Wuhan flu pandemic; (3) the death of George Floyd in police custody; (4) the theft of the presidential election; (5) the January 6 Capitol riot; and (6) the wrongful prosecutions and lawsuits against Trump this year.
Now, however, the right has struck back hard in one of the most unlikely places, the Argentine presidential election. See: https://miamiindependent.com/argentine-presidential-election-without-electoral-college/, and https://miamiindependent.com/argentine-presidential-campaign-comes-to-key-biscayne/. Finally, on Sunday, November 19 this year, Javier Milei, the libertarian candidate, won the runoff. Argentina has a transition period from election to inauguration of less than a month, so next Sunday he will be inaugurated as President.
Argentines voted for President the old fashioned way: They walked in person into polling stations, presented their ID cards, marked a paper ballot, deposited it in the ballot box inside the polling station, and at the end of the day poll workers counted the ballots right there in the polling station. This was all done in one day, and the results were announced that evening. Milei received over 55% of the more than 26 million votes cast on election day, representing 76% turnout of eligible voters, from a total Argentine population of some 45 million.
Got Woke, Went Broke
Argentina is a country that got woke and went broke. At the beginning of the XXth century, it was one of the most prosperous countries in the world. However, a gradual adoption of woke progressive policies, by socialist, collectivist and statist governments, undid the country’s prosperity. Citizens started to believe the lie that French economist Frederic Bastiat warned against: Everyone wants to live off the state, forgetting that the state lives off everyone. In 1929 Argentina abandoned the gold standard and followed with protectionist trade policies.
Socialist governance from all parties and military governments has been consolidated in Argentina since 1946, with the founding of the Peronist movement by President Lieutenant General Juan Domingo Peron and his lovely wife Evita. All governments since then have followed similar policies to expand this welfare state, which has produced its own clients to depend on its continuing subsidies, including both businesses and labor unions. Today, only around six million citizens in the formal (law-abiding and tax-paying) private sector must pay taxes to support around 20 million government bureaucrats, pensioners and other social security recipients, and crony capitalists and other recipients of public subsidies.
Milei announced his campaign with the promise to “break up with the status quo.” Among Milei’s very first steps must be cutting government spending and eliminating broad swathes of the Argentine welfare state. He has announced his intention to eliminate the ministries of: culture; women, gender and diversity; public works; and transport. He also plans to eliminate the central bank, of course, for devaluing the currency through inflation. For an international model, he points to Ireland with its low tax rates and reasonable regulations. Milei had proclaimed that: “This is a society infested by socialism, and what we need to achieve is eliminating socialism from people’s minds.”
Milei not only advocates for libertarian principles of political economy, but also shows a genuine hatred for the welfare state. He refers to politicians and administrators as a “caste” of “sociopaths” and “parasites” who seek to live off others. He declared that: “The politics of thievery is over.”
He must implement immediate, not gradual, reform - - cold turkey! He is a defender of the middle class, which has been undermined by all the currency devaluations, high taxes, unsustainable spending and borrowing, unreasonable regulations, and welfare policies. Milei has won the battle of ideas in the electorate. What remains now is the battle of implementation, against the opposition of the legislative branch and the administrative state, and maybe also the judicial branch. In any event, his policies will cause short-term pain, but there is no alternative.
The main issue in this campaign, reflecting not only the incumbent administration, but also the entire Peronista legacy in government, was inflation and the devaluation of the currency. British economist John Maynard Keynes cited Lenin for the proposition that the surest way to undermine the middle class is to debauch the currency. In Argentina, the middle class has been getting undermined for some 80 years at least. For example, 12 years ago the exchange rate for one United States Dollar was 3,45 pesos, and one year ago it was around six pesos, while today it is 361 pesos, and higher on the black market.
Milei campaigned against the entire socialist Peronista legacy in Argentine government, and specifically he pointed to the failure of the incumbent administration: (1) inflation of over 140% this year, the product of a feckless central bank that he has pledged to abolish; (2) the economy has contracted so that over 40% of people are living in poverty; and (3) unsustainable government spending and borrowing, including three defaults over the last 25 years.
In response, Milei has promised to: (1) adopt the United States Dollar as the national currency, so that the central bank will not be able to print pesos and cause inflation; (2) radically cut government spending and eliminate administrative ministries completely; and (3) back off excessive alarm over so-called man-made climate change. He has stated that “Climate change is a socialist lie.”
He also opposes: (1) mass illegal immigration; (2) vaccine mandates against the Wuhan flu; and (3) sending more arms to Ukraine. Milei may be a radical libertarian in his political economy, but he is a conservative on social and cultural matters. He opposes abortion on demand and drug legalization, and he has just converted from Catholicism to Orthodox Judaism.
Milei campaigned not only against the socialist Peronista political establishment, but also against the Liberation Theology Catholicism of Pope Francis. He beat both establishments: church and state.
Milei’s policy perspective is based on the teachings of such free-market economists as Frederick Bastiat, Ludwig von Mises and Murray Rothbard, and he is a follower of Austrian economics. From the University of Chicago, he is influenced by Friedrich Hayek, Milton Friedman and Robert Lucas, so in that sense he is a Chicago Boy, even though he has never visited that city.
His proposal to dollarize Argentina, and thereby break the central bank’s cycle of devaluation and inflation, is based on the work of economist Steven Hanke of Johns Hopkins University, and the example of such other countries in Latin America as Ecuador, El Salvador and Panama.
He will not take Argentina into the new currency system proposed by the BRICS: Brazil, Russia, India, China and South Africa. In international relations, he will instead lean toward the United States, Israel and Europe. He promises to hold off at arm’s length any investment from or trade with China, even though it has now become Argentina’s second largest trading partner. China and Argentina are complementary trading partners, because Argentina is such a large producer of agricultural products. Milei must cut export taxes to boost agricultural output. China also operates a military space station in Argentina that locals have no access to.
His administration will include members of the Menem administration from the 1990’s, when Argentina had stable money pegged to the United States Dollar via a currency board. During this period, foreign investment flowed into the country, including for privatizations in the telecom, electric power and infrastructure industries.
Omens forhttps://miamiindependent.com/dispatch-from-hong-kong/ America
Milei’s victory was welcomed by Donald Trump, and some progressive analysts are warning that his victory is an omen of trouble for the Obama-Biden 3.0 administration and Bidenomics next year. The primary campaign issue for Milei was inflation, and that is the primary weakness of Democrats in next year’s elections. It is not just the middle class that does not like to see its currency devalued and interest rates shoot up.
The other campaign issue that has worked for the right recently is illegal immigration for Geert Wilders in the Netherlands. With issues like these, Biden’s age will hardly matter.