Argentina's Midterm Election Hands Landslide Win to Milei's Libertarian Overhaul
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Argentina's midterm election resulted in a landslide win for Milei's libertarian coalition, sparking debate among commenters about the implications of libertarian policies and the country's economic future.
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> using a Treasury fund (not funded by tax dollars)
tell me, where do you think the Treasury gets its dollars...
> The ESF can convert SDRs into dollars on its account by issuing certificates against them and selling the certificates to the Federal Reserve,[6] and later repurchase them when it has surplus cash.
So they did actually fund it by printing money.
https://www.piie.com/publications/chapters_preview/43/6iie27...
Under “disbursement and repayment”
For Argentina to be stable, we would need a stable industrial base. That's very difficult to establish when the state is, in effect, taxing our exports and subsidizing our imports, even if it's less directly than during the Kirchner years.
If Argentine output declines and unemployment soars, it will be very hard for Milei or his successor to avoid defaulting on the bailout loans, unless an even larger bailout follows, as it often has.
And this deplorable situation is not just a result of the central bank not printing money, which is indeed a perfectly libertarian position. Rather, it is a result of a massive outflow of foreign exchange reserves from the central bank in recent months, the explicit objective being to artificially raise the exchange value of the peso, worsening our uncompetitive situation.
A less competitive domestic industry does not imply an overvalued currency. It could mean that domestic industry is economically less productive compared to foreign industries. Since Argentine domestic industry has enjoyed vast protectionist barriers for a long time, there is good reason to think this is why they are uncompetitive. At any rate, inflating the peso to make industry nominally productive in terms of foreign exchange, as past administrations have done, would also not make domestic argentinian industries more productive; it would simply trade a boost to domestic industry with a drain on the argentine government, hiding the less productive nature of domestic industry until hyperinflation catches up.
Removing protectionist barriers is also quite libertarian, and not even uniquely libertarian - free trade is universally supported by well-trained economists. In Argentina's case, this means domestic industry has to catch up for all the lost productivity that trade barriers have caused over the years.
Oh, I certainly agree with that!
> Removing protectionist barriers is also quite libertarian, and not even uniquely libertarian
I agree with that too.
> Since Argentine domestic industry has enjoyed vast protectionist barriers for a long time, there is good reason to think this is why they are uncompetitive.
That is also true, but I don't think it's actually an alternative to having an overvalued currency as you've framed it; rather, when the currency is allowed to float freely (or, rather, sink freely), the market solves the problem. The weaker currency can buy less imports, making domestic industry more price-competitive, at least domestically. The export price domestic industry needs in order to pay its wages and locally sourced resources falls, so its products become cheaper in international markets, where their cheapness can enable them to compete with less shitty foreign alternatives, and manufacturing products for export becomes more profitable.
There may be very-low-value-added industries like the air-conditioner-assembly industry in Tierra del Fuego which never become profitable in this way, and will need to close, but I believe our automotive and textile supply chains are largely domestic on a value-added basis.
All of this is very different from the kind of hyperinflation that results from unconstrained money-printing. But hyperinflation is the Black Beast that seemed ready to sink Milei a month or two into his term, and certainly some form of hyperinflation could ensue if people lose their residual faith in the peso, perhaps faster than the lack of newly printed pesos could bring it to a halt.
The major risk of such free-market shocks is that a temporary economic setback could cause permanent damage or death to some people, for example through lack of access to health care or through famine.
I think Argentina is not really in danger of famine on a free-market basis, despite our rampant latifundismo. At worst, the situation could require a taxpayer-funded food-stamp program for some of the staples previously covered by Precios Cuidados, such as sunflower oil, polenta, enriched white flour, sugar, and yerba mate. Maybe we could add lentils, soybeans, and texturized vegetable protein. Today, though, we're far from famine—every neighborhood butcher I've visited in the conurbano discards their beef-fat cuttings, unable to sell them. When I volunteered for the Casa de Maria in Isla Maciel some years ago, the mostly obese villa residents to whom we distributed boxes of donated food largely resold it rather than eating it. I haven't been back there in years, but I imagine that to still be the case.
Health care access has been a major problem under Milei, but we do still have the public health-care system Perón established, so we are still not in the terrible situation of the US, where people with major chronic health problems only receive medical care when an ambulance brings them to the emergency room. Argentina's healthcare outcomes as measured by statistics such as infant mortality are comparable to the US, despite being a much poorer country.
Unless Argentina defaults, as they have many times before.
The only difference between American socialism and Argentinian socialism was that Argentinian socialism pretended to help the poor but America doesn't even pretend to help the poor.
The US also bails out a group of people all the time. The group is called the rich.
Furthermore, it subsidizes select groups like big ag.
Except these, the US is predominantly capitalistic but so was Argentina. Their populace was fed up with the pretense of helping the poor while bailing out oligarchs. America doesn't seem to pretend to help the poor. Poors are undesirables.
“Bailing out the rich” isn’t socialist is it? What do you think “socialist” means?
I don’t think you understand why the word “socialist” scares so many people. It’s not a word you can just slap on anything to make it “bad”, many people are actually scared about the underlying ideas not the word.
Some Americans seem to just think socialism=bad “because the CIA and the NYT does propaganda”. You may think America is bad and I may agree with you, that doesn’t make it socialist.
In the GDR you couldn’t start a private enterprise without a license. Any enterprise doing anything.
In socialist Burma, there were no privately-owned factories _at all_.
In Czechoslovakia the constitution banned a private company from employing anyone other than the owner of the company.
In Soviet Russia you needed a permit to move city. If you were a farmer you were unlikely to get that permit. You work for the collective farm, the government set the price they would pay you for your produce, and you couldn’t move city to a new job.
I hope these examples show why “the us government is socialist partly because it owns shares in Intel and partly because it’s a lender-of-last-resort for rich people” sounds fatuous.
Your argument is a variant of the straw man fallacy. Look it up.
Snap, Chip, ssi, ssdi, medicaid, medicare (since recipients don't pay their way), ACA subsidies, progressive income tax (half of us pay no federal tax at all), 1-12 schooling/daycare (often with free lunch, sometimes also free breakfast)
Big brothers/sisters, salvation army, habitat for humanity, red cross, food banks too numerous to list, Shriners hospitals
Oh, forgot about the billions Los Angeles has spent on homeless housing
America at least "pretends"
Literally the things held hostage for politics right now? How can you claim America helps the poor when we are literally living a government shutdown where poor are held hostage?
> Big brothers/sisters, salvation army, habitat for humanity, red cross, food banks too numerous to list, Shriners hospitals
These are not government. This is about people helping people. Some American people are helpful to each other. But the societal unit of government isn't - aka - there are people who don't want to help others at all.
> America at least "pretends"
American people try really hard - especially in blue states. But American government system holds people hostage. The work requirements, the constant paperwork, the sudden ineligibility - this is all uniquely American - designed to not disburse the benefits that people may be entitled to. America has the pretence of programs but if they truly wanted to help the poor, they'd make the programs truly usable - not hostage to political processes and eligibility corner cases.
Every country is more than its government. The original assertion was that America doesn't pretend to care about the poor.
Apparently, the assertion should have been "America doesn't care about the poor as much as I feel they should and no evidence you bring contrariwise will change my mind".
It reminds me of the houses in the gated communities with "no borders" signs in the manicured lawns.
Shriners are cool though.
These problems have much less to do with libertarianism per se than the practical problem of funding a massive welfare state without utilizing a destructive amount of money printing. Milei is walking a tightrope of unwinding this system slowly. The problem is endemic to having a massive welfare state than it is to libertarianism, and it is one reason why libertarians (also, bog standard neoliberals) are critical of having a massive government. When the government has an extremely large balance sheet, so large that its taxation and redistribution schemes are negative sum, it is only a matter of time before the whole thing comes crashing down. That's where the economy was headed before Milei. The collapse was avoided, albiet narrowly, but that doesn't mean everything is suddenly normal again. The road to recovery will be a long one.
To use your car analogy, the previous peronist parties set up a 1000 mile family trip, bought a quarter of the gas, and then when has started running out wrote a bunch of gas IOUs and pretended that the IOUs were a substitute for real gas. The responsibke adult comes in, and is desperately trying to find ways to trade IOUs or anything else that's available for some gas so that the family can survive and get home. That means that the family might even have to skip a meal or two, which is painful in the present. But it's all a sacrifice in service of ensuring the family's survival over actually starving in the desert when they realized IOUs don't power cars.
Kirchner-era Peronism, though just as thoroughly based on social-justice rhetoric as Perón ever was, never approached its level of state enterprises like the Justicialist car and IAPI; despite renationalization of Aerolíneas, YPF, and the pension system, there was no Kirchnerist equivalent of Airbus, Ariane, or Systembolaget. So recent Peronism is far less Socialist in practice even than current France and Sweden, much less Bolshevik Russia.
Socialists have run argentina for many decades. It wasnt going well and they gave Milei a mandate to fix Argentina. If the people just voted in a landslide confirming their continued approval. Then we can conclude those who are best to judge, the people, think it's working.
> It's like if I decide to use a car to drive 1000 miles, but I only buy enough gas for 500 miles, but a dude at the midpoint in my journey offers to lend me enough money for the next 500 miles of gas if I kick all Chinese people out of my car in return, and then I return and say see due to my amazing thought leadership my car has double the gas mileage now.
In your scenario you assign no blame at all to the previous governments? You completely ignore and discount why the people decided to give him a mandate?
Milei's seemed spectacularly unpopular only 3 weeks ago.
Argentina has never had a Socialist President.
There hasn't been a mainstream Socialist party in Argentina in decades.
The PTS https://en.wikipedia.org/wiki/Socialist_Workers%27_Party_(Ar... has four seats in the Cámara de Diputados and zero seats in the Senate. The PO https://en.wikipedia.org/wiki/Workers%27_Party_(Argentina) has one seat in Diputados and zero seats in the Senate. The PCA https://en.wikipedia.org/wiki/Communist_Party_of_Argentina has zero seats in Congress.
https://en.wikipedia.org/wiki/Hermes_Binner was the first (and I think only) Socialist governor of an Argentine province, from 02007 to 02011, and he died in 02020.
The UCR https://en.wikipedia.org/wiki/Radical_Civic_Union is nominally a member of the Socialist International, and many decades ago was roughly aligned with Socialism, but in recent decades their politics mostly favor big landowners and other big businesses. Instead of running their own presidential candidate in 02023, they backed the mano dura Patricia Bullrich, notable for being the only major candidate more right-wing than Milei; he made her his Minister of Security. They did hold the presidency for two years until the crisis in 02001, and previously with Alfonsín in the 80s. They've voted in favor of a lot of Milei's initiatives in Congress; https://en.wikipedia.org/wiki/Argentine_National_Congress lists them as "independent".
For one thing, it hasn’t been long enough. For another, Argentina is in such a deep hole it will take a generation at best to get out of it.
If Milei's story arc is anything like Thatcher's it ends with him being stabbed in the back by center-left "wets", who become overly responsive to the most emotional voters. The country doesn't revert to Peronism but does enter another period of slow long term decline as the singular personality who pulled it back from the brink exits the stage. The natural Argentinian socialist worldview reasserts itself as the lessons are never learned. We will have to see if Milei is able to build up a protege and natural successor. Trump seems to be doing it successfully with JD Vance, but so far Milei seems to have nobody waiting in the wings - just like Thatcher.
Second, Vance doesn't have anything like Trump's charisma. He's much more wooden. He would have to hold the Trump coalition together through policy alone, and I'm not sure that can be done. (All right, he can also use nostalgia. I'm not sure that will be enough.)
I don't follow the details with Milei but I get the impression of something similar where he's starting well undoing dumb stuff but I'm not sure about trying to prop up the currency rather than just letting it float and having normal economics like most democratic counties.
I think a lot of good governance comes down to undo stupid stuff and try not to do new stupid stuff.