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There has been a lot of discussion of newly elected Argentine president Javier Milei’s proposals for economic reform. Much of that discussion has been on how successfully he will implement his ambitious proposals for freeing Argentina’s highly statist economy. He has proposed getting rid of the central bank and putting Argentina on the US dollar standard that, if successful, would bring Argentina’s inflation rate down from triple digits to single digits. He has proposed slashing government spending by as much as 15 percent of GDP. To put that in perspective, if the US federal government did that, it would cut spending from about 24 percent of GDP to about 9 percent of GDP. He has proposed eliminating eleven government ministries and agencies and privatizing many of Argentina’s government-owned enterprises.
What he will achieve is difficult to know. As Danish physicist Niels Bohr said, in a famous line often also attributed to baseball legend Yogi Berra, “Prediction is very difficult, especially if it’s about the future.” But what we can say is that Milei has a highly developed understanding of the most important ideas in economics. He will almost certainly make better decisions and more-thoughtful trade-offs than if he had the low-level, or even zero, understanding that is typical of politicians. A look at some of his pronouncements in interviews shows a sophisticated analytic mind at work.
This is from my latest article for Hoover’s Defining Ideas, titled “New Argentine Leader’s Economic Savvy,” Defining Ideas, December 7, 2023. Javier’s economic understanding is quite impressive.
Read the whole thing.
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