Hey lolberts, how’s Milei doing? Incredibly well, actually – @lemechantneolib
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I thought It’d be interesting to post this here considering the amount of people who slander Milei based on literal lies made up in their minds. Goes to prove that no amount of hard evidence will be enough to convince idiotic leftists that they are wrong on everything (as if the past 120 years hadn’t been enough) IntroductionOne year after Milei was inaugurated, the Argentine president’s record is better than anything I could’ve imagined. This is coming from a convinced classical liberal who believes shock therapies have been widely misjudged historically, mainly because of the irresponsible monetary and fiscal policies during those of Romania, Moldova, Russia, Ukraine and late-Menem’s Argentina (see my “Why Shock Therapies Fail” article).For the last 3 months, I have published articles documenting the accomplishments of the Milei administration, particularly concerning the Argentine poverty rate. I have focused on this indicator since, to me, it was the last half-decent argument against his administration. I could’ve spent more time debunking claims of rising inflation based on year-on-year indicators that accounted for Alberto Fernandez’s time in office, but I believe every minimally rational person was already aware of their idiocy.On the other hand, I’ll see pro-Milei people incapable of addressing the rising poverty claims to this day, and resorting to arguments along the lines of “Well, you can’t dismantle Argentina’s Peronist legacy in a single year!” There is truth to that argument, of course, but it remains dumbfounding that even among many of his supporters, there is no knowledge of the fact that poverty is currently lower than when Milei took office.I will begin this article by exposing all the evidence we have that the claim above is accurate. I will then move on to all the other spectacular gains made since Javier Milei was inaugurated. As we will see, it is no exaggeration to say that according to every single relevant economic measure, Argentina is much better off today than it was only a year ago. PovertyFor this section, I will rely on the work of 2 different Argentine universities, both relying on official INDEC data to make projections of the (quasi-)current poverty rate. The first one, the Universidad Catolica Argentina (UCA), is the one that has provided the 57% January rate and the 53% first-semester rate that have been widely shared in mainstream media outlets and the Internet at large. The second university, the Universidad Torcuato Di Tella, has followed the data on this issue for a couple of years, thanks to the work of economist Martin González-Rozada and his “Nowcast de Pobreza.”First, let’s see the UCA’s projections for the third trimester of 2024 (average of July, August and September) and the month of October 2024. As you can see on the graph below, its microsimulations have projected a 46.8% poverty rate for the first period and a 44.6% poverty rate for October. We can also observe that the poverty rate for the fourth trimester of 2023 (average of October, November and December) was 45.2%, a higher rate than their latest projection. However, even this number is a bit misleading if used as the pre-Milei data point, since the poverty rate of the month Milei took office stood at 49.5%, according to the same university (see second image). Therefore, if these projections are accurate, the poverty rate was already 5.3 percentage points lower 2 months ago than at the beginning of Javier Milei’s presidency. Unfortunately, we don’t have access to the confidence intervals of these projections. 5.3 percentage points is a large enough gap to be reasonably confident about the reduction, but the second university’s findings should lay to rest our remaining doubts. Finally, indigence (essentially a measure of extreme poverty) would have already been 3 points lower than during the fourth trimester of 2023 by October of this year, according to the same projections.Introduction The Universidad Torcuato Di Tella has also projected a reduction of the poverty rate since December of 2023, their latest number indicating that the poverty rate for the bimester of October and November stood at 45.7% while the rate for the whole semester of June to November was 48.1%. While this is a bit higher than the results of the UCA’s microsimulations, the second statistic comes with a confidence interval of 95%. This means that if you repeated the experiment an infinite amount of time, the true value wouldn’t be in that interval in only 5% of cases. According to this confidence level, the lower end of the projection is an average of 46.6% for the entire semester of June to November, while its higher end is… 49.5% (you can see this in the graph below). If you’ve been following so far, you may have noticed that this is the exact same poverty rate as in December of 2023 but, instead of covering a single month, it covers an entire semester during which the poverty rate was constantly falling. Putting this together with the findings of the UCA, taking into account the fact that the latest estimate we have is a bimester starting 2 months ago and considering that nominal wage growth has outpaced inflation every single month from April to September according to official INDEC data (likely during the last 2-3 months as well since inflation has hit record lows and the economy is growing substantially again), I think it’s fair to say that it would be a quasi-impossibility for poverty to be higher than 49.5% at the moment. Poverty is almost undoubtedly lower today than when Milei first entered the Casa Rosada. InflationThe rapid drop in inflation is probably the most significant change that occurred under Milei’s administration. However, this one was more expected to me than the extremely quick turnaround in the poverty rate. There is no secret solution to rapidly rising inflation; it’s all about slowing down monetary growth, precisely what Milei has achieved. While the inflation reduction had stagnated from May to August, monthly inflation has since dropped to record lows. The graph below speaks for itself, the stark improvement in inflation during Milei’s presidency is undeniable. The 2.4% monthly inflation rate is the lowest one the country has experienced since the mid-2020 period. Real Wages/Living StandardsAs I mentioned earlier, monthly wage growth has continually outpaced inflation from April to September 2024. I have calculated the total real wage growth during this period and obtained a result of about 13%, or 2.2% per month. For the first time since 2015, a majority of Argentine citizens (53%) now say their living standards are improving. Risk LevelArgentina’s country risk index, which reflects investors’ view of the country’s sovereign debt, dropped to about 750 points in October 2024 from more than 2,500 points a year ago. This represents the lowest risk level since the middle of 2019. GrowthEarlier this month, the Argentine Minister of Finance, Luis Caputo, stated that for 2025: “all analysts predict that Argentina will grow by 5%, which is the highest level of growth in the last 15 years.” There’s a bit of hyperbole there, as growth forecasts for 2025 still vary, but 5% is very close to the average prediction. Let’s break it down: Latest 2025 forecasts IMF: 5% World Bank: 5% OECD: 3.6% JP Morgan: 5.2% Central Bank survey of economists, December: 4.2% (up from 3.5% forecast in October) BBVA Research: 5.5% Fitch Solutions: 2.8% Trading Economics: 5.1% Oxford Economics: 4% -> Average: 4.49% Average LatAm 2025 forecasts IMF: 2.3% World Bank: 2.5% CEPAL: 2.6% -> Average: 2.47% **Note: As I write this article, the growth rate for 2024’s third trimester has come out, blowing all expectations out of the water. JP Morgan had shocked many analysts by projecting an 8.5% annualized figure for Q3, yet the true numbers give us an annualized rate of over 16.5%! Hence, the predicted growth rates for Argentina are most likely too pessimistic and will be adjusted accordingly in the next few weeks or months. BudgetFor the 11th month in a row in November, Javier Milei has accumulated monthly budget surpluses. On an annual basis, this is the first time Argentina will record a surplus in 16 years, the last one taking place during the Argentine debt restructuring (2008). HousingAfter Milei deregulated the housing market, Buenos Aires’ housing supply was multiplied more than threefold and the cost of rent shrank by approximately 30%, proving the YIMBYs right again on the strong link between housing supply and affordability. ApprovalJavier Milei and his VP are currently the most popular politicians in the country. Milei’s approval rating, which had predictably taken a small hit during the economic adjustment, is back to 56%. This high level of approval after a year of shock therapy may well be a first in history. International ReservesInternational reserves are not only primordial to help stabilize the currency, ensure debt repayment, secure essential imports, bolster investor confidence, mitigate global shocks and create space for economic reforms, but they are of crucial importance to Milei’s dollarization plan. During his time in office, Javier Milei has managed to increase his country’s gross and net international reserves substantially. Industrial ActivityIndustrial activity is another indicator that is performing better than when Milei took office. While the adjustment led to a temporary drop in activity, the entirety of the decline had been erased by September of this year. Economic FreedomEarlier this year, Milei stated that his ultimate goal was for Argentina to top the economic freedom rankings. This is a particularly steep hill considering that Argentina ranked 159th out of 165 countries in 2022 on the Fraser Institute’s Economic Freedom of the World Index. While we don’t have any estimations of how this may have changed on the Fraser Index, the Freedom and Progress Foundation has recently estimated that, on the Heritage Institute’s Economic Freedom Index, the country will gain around 61 positions in 2024 alone, potentially going from 145th (similar to Pakistan’s 147th) to 84th position (similar to Italy’s 81st). ConclusionIf history is any judge of things to come, such a successful shock therapy has a very high likelihood of giving birth to an economic miracle in the next 10 years. The anti-market view that pervades the social sciences, primarily reflected through its obsession with “neoliberalism,” could be challenged in a way it hasn’t been since Leszek Balcerowicz and Mart Laar transformed their respective economies and unleashed economic miracles.Furthermore, libertarianism may become the next model for the global right-wing, which has recently shifted towards protectionist policies more reminiscent of the economic legacy Milei is currently dismantling in Argentina, Peronism, than his own free-market reforms. National-conservative pundits like Tucker Carlson, who recently stated that “libertarian economics was a scam perpetrated by the beneficiaries of the economic system that they were defending,” shouldn’t be given any credit for the events currently unfolding in Argentina, despite his and Donald Trump’s links with Milei. By taking inspiration from the Argentine president’s reforms, Elon and Vivek’s DOGE could, on the other hand, push this side of the spectrum in a more enlightened direction.While only time will tell how this experiment ends, there are many reasons to be strongly optimistic about the future of Argentina. It may even be justified to hold a reasonably optimistic view of Latin America’s, as there’s a not-insignificant possibility that this will mark the last chapter of the failed Pink Wave, which has poisoned Latin America’s economic agenda throughout the 21st century. Indeed, it’s never too late to embrace this age-old truth: Free-market capitalism works. submitted by /u/EditorStatus7466 |
