J.D. Tuccille: The remarkable triumph of Javier Milei
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Argentines have decades of experience with making bad choices and suffering their consequences, but this time they may have broken that unfortunate pattern by electing leadership that wants the state to take a back seat to individuals and private effort.
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Drawing on official data, Reuters reports that Argentina's 'economic activity rose 7.7 per cent in April compared with the same month last year.' That was higher than expected and a welcome addition to news that the economy had grown by 5.8 per cent during the full first quarter relative to the same quarter the previous year. Early numbers put Argentina's second-quarter growth at 7.6 per cent. By contrast, Canada's economy grew at an annual 2.2 percent in the first quarter and the U.S. economy shrank a bit.
In equally encouraging news, Argentina's 'monthly inflation rate has fallen below two per cent for the first time in five years,' according to the Financial Times. That's still high in North American terms, but Argentina's governments have a history of wildly expanding the money supply to pay off debt and finance expenditures, resulting in inflation rates in the hundreds and even thousands per cent per year. Inflation slowed somewhat in recent years, but it was over 200 per cent in 2023 and Milei was elected on a promise to stabilize prices — even if it meant adopting the U.S. dollar as the country's official currency.
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Importantly, the poverty rate in Argentina has also fallen to 38.1 per cent of the population at the end of 2024 from 41.7 per cent when Milei took office. Again, that remains very high, but it's an improvement in a country where politicians have long seemed committed to keeping people poor and dependent on the state.
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This wasn't supposed to happen. In a November 2023 open letter, over 100 economists warned that Milei's economic 'proposals, rooted in the economy of laissez-faire and which include controversial ideas such as dollarization and significant reductions in public spending, are fraught with risks that make them potentially very harmful to the Argentine economy and people.'
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The economists — including such academic luminaries as Thomas Piketty and Jayati Ghosh — warned of havoc if Milei implemented his free-market plans. Voters weren't impressed by the forecast of doom; they chose the self-described 'anarcho-capitalist' economist and his upstart political coalition over the standard-bearer of the dominant Justicialist Party.
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