The Milei Miracle

I’ve written extensively about the amazing libertarian reforms being implemented by Javier Milei in Argentina. Here’s a very short video celebrating his accomplishments.

Except the headline of this column is misleading. What’s happening in Argentina is super impressive, but it’s not a miracle.

Yes, Milei’s reforms are generating great results, but that is exactly what libertarians and small-government conservatives said would happen.

Let’s start with this celebration of the amazing growth of private-sector wages since Milei took office in late 2023.

Or how about the astounding way that Milei has conquered inflation (I also like how this tweet mocks the statists like Piketty who frantically and erroneously warned that Milei’s election would produce an economic catastrophe).

The folks at National Review have a new editorial about Argentina’s amazing renaissance.

Here are some excerpts.

Argentina’s economy is growing at 7.7 percent, according to the latest year-over-year data. …Argentina is achieving this growth not through a strategic industrial policy or a mercantilist trade policy. It’s achieving it by rolling back the overextended public sector, slashing the government budget, controlling the money supply, and removing price controls. …He turned a budget deficit into a surplus in his first full year in office. He eliminated half of the country’s cabinet departments. …When Milei took office in December 2023, inflation was 25 percent per month. In May, it was 1.5 percent. …the poverty rate…has been falling since the second half of last year and is now lower than when Milei became president. …Milei knows that these are not miracles. They may feel miraculous for people who have been suffering, but they are exactly what economic principles suggest would happen when government controls are removed and people are made free to buy, sell, produce, and consume as they see fit. People have known about this since at least the time of Adam Smith, yet they continue to be surprised when it works.

I especially like the conclusion of the editorial.

If Argentina can become a byword for free markets, responsible fiscal policy, and supercharged economic growth, anything is possible — even a rejuvenation of those principles in the United States.

Let’s also look at some excerpts from Scott Lincicome’s article for the Cato Institute.

Thanks to decades of Peronist mismanagement and corruption, an Argentinian economy that once paralleled those of the world’s wealthiest countries had become a global laughingstock with skyrocketing inflation, routine fiscal crises, and crippling poverty. …Inaugurated in December 2023, Milei immediately set about to reverse these and other trends by shrinking the bloated Argentine bureaucracy, slashing government spending, and in turn getting inflation under control. Within the first month, he’d cut the number of government ministries in half—from 18 to nine—and cut spending by 30 percent… Milei’s deregulatory work that’s even more impressive… Milei in his first year in office “fired 37,000 public employees and abolished about 100 secretariats and subsecretariats in addition to more than 200 lower-level bureaucratic departments.” He’s also rapidly deregulated across the economy…in Milei’s first year in office, his administration had implemented 672 regulatory reforms (331 eliminated and 341 modified), or around two per day for an entire year.

All told, an amazing set of results.

I also can’t resist citing one more sentence.

Milei’s team of legal experts and economists have pursued a clear mission: “to increase freedom rather than make the government more efficient.”

Let’s close with another tweet.

Here’s Noah Smith, who is not a libertarian, shared two days ago.

Give him credit for acknowledging Milei’s success.

I’ll add two comments about this tweet, one about economic data and the other about predicting whether Milei would get great results.

Regarding data, I don’t think anyone should get overly excited by one month or one quarter of economic data. Even one year of data might create a misleading impression (which is why my Anti-Convergence Club is always based on decades of data). That being said, there is every reason to expect continuing strong results for Argentina.

Regarding predictions, Smith’s tweet asserts that libertarians didn’t expect Milei to be so wildly successful. At the risk of sounding like a politician, I agree and disagree.

• The “agree” part is that many libertarians were worried at the beginning of Milei’s presidency that he might face immovable opposition from the Peronist-controlled legislature. We also worried that the special interest groups might launch massive – and successful – protests that would derail necessary reforms. So if you asked me in December 2023 for my prediction, I would not have been overflowing with optimism.
• The “disagree” part is that I have always had total and absolute confidence that radical pro-market policies will produce great results, anywhere and everywhere. And I assume other libertarians (as well as Reagan-type conservatives) share my faith that good policies lead to good outcomes. So if I was told in December 2023 what Milei would have accomplished in his first 18 months, I would have fully expected the great news we now see.

In other words, what’s miraculous is that the reforms happened. The subsequent economic renaissance has been boringly inevitable (but totally wonderful).

P.S. I am cautiously optimistic that Milei will get more allies in the legislature after Argentina’s mid-term elections later this year.

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Image credit: Ilan Berkenwald | CC BY-SA 2.0 DEED.