Argentina’s problems were common among emerging market economies in the 1980s and early 1990s. However, most of these countries have since made dramatic improvements in their policy-making.
Fiscal policy was tightened, central banks were made independent with bans on financing government deficits, exchange rates were floated and domestic financial markets were deepened.
OK, it’s possible to argue about improve or not there. But essentially that statement is that developing countries stopped using MMT and so their economies improved. Which is interesting, no?
On day one of his administration, Javier Milei abolished about half of all Argentine government departments. That’s not bad going. The more he destroys and privatises the Argentinian state the longer and harder that it will take subsequent leftwing Argentinian regimes to reverse what he has done.
I suspect that the easy part is the executive order though, the hard part will be getting rid of the costs associated with those, now defunct, government departments, former civil servants will protest, as will their unions, as will those dependent upon such agencies.
A good first day though.
Thing is though, Argentina should never had been an emerging market economy in the first place. It saw itself as a Europeanised middle sized power, indeed considered itself powerful enough to go toe to toe with Britain.
It has suffered from 90 years of fascism and socialism. It could have recovered from the Great Depression but it never really did because it had interventionist, ideologically driven governments who ruined the country.
See also Venezuela and its squandered potential.
I noticed they were bragging in The Australian newspaper that Paul Keating was the one who floated the Aussie dollar.
Of course he was Labor. And Labor seem to feel the need to regain prestige after the failed referendum.
They’re even talking about cutting back immigration. I know you Brits are all absolutely certain that they’ll do it.
As for Milei, I agree with you JG. Abolishing the departments is the way to go. But I also agree that trying to sort out the costs will go on and on and on.
Perhaps I should mention the case of Brittany Higgins, who was paid $A 2.4 million by the incoming Labor government for her rape claim. She naturally maintained that the out-going Liberals had been really mean to her to by not believing everything she said. One notes that the trial was cancelled for juror misconduct. And they’re not going to conduct another one because poor old Brittany’s feelings were too hurt.
This will certainly keep on going on and on and on.
There’s no shortage of developing countries which are not really developing and where MMT hasn’t been tried which isn’t to say that MMT wouldn’t make a bad situation worse .
I wonder if Liz has bought her plane ticket yet?
Ottokring said, “Thing is though, Argentina should never had been an emerging market economy in the first place.”
This was my first thought. But I think Tim has taken this out of context; the comment does not appear until well into the article. I think that the author of the article was saying in a similar way to emerging market economies rather than Argentina was one.
As Ottokring and the article both say, Argentina was a rich country: 10th richest in the world and Venezuela was 6th at one time.
“emerging market economies… central banks…bans on financing government deficits”
And yet, having encouraged such bans in “emerging” economies, over the past 15 or so years, the central banks of “developed” economies have themselves enthusiastically adopted the previously egregious policy of financing government deficits.
Abolishing things is all very well, but experience with our lot suggests that sometimes nothing changes except the name on the office door. I note he has already rowed back on leaving the Paris “climate change” Accord, and watered down his opposition to Net Zero.
The proof of the pudding will be in the eating, as usual.
Having said all that, all strength to his elbow, obviously; someone has to start hacking back the undergrowth and draining the swamp, sometime.
Who is planning on moving there?
Will Millei actually throw enough socialists out of helicopters before the next election to make it work?
Interesting discussion on the Triggernometry podcast with a former govt advisor to Cameron about the power of the civil service and the difficulties in getting anything done.
Amusingly for me at least made me think if he’d ever watched Yes Minister as it sounded at times like an old plot line from the show