Trego's Mountain Ear

I remember a conversation with a liberal grad student – remember, I lived in the Sociology department, so I dealt with a lot of liberal grad students. And I recognize that the progressives took the name liberal away from us to get rid of the blunders associated with progressivism.

His point was easy to articulate, easy to understand: libertarians should not be elected to office because they don’t believe government works – you need to fill the offices with people who believe the government can (and will) solve problems.

I didn’t articulate an argument – Eric had a point. Still, the world eventually comes to a spot where reality kicks in. Argentina has reached a point where the country has elected an openly libertarian president. Javier Milei, in a run-off election, won the presidency. Let’s look at the generations of governmental failures that moved Argentinans to vote in a Libertarian Government:

First, productivity: A history of economic trouble in Argentina | World Finance

“Argentina was once one of the world’s richest economies. Only as recently as the turn of the 20th century, Argentina, along with several European and North American economies, was part of an elite club of prosperous countries – a club that, following the rapid rise of China and other emerging market economies, has grown in size in the decades since.

Argentina, however, really has fallen: while a century ago it was one of the world’s most prosperous economies, it has now, according to the World Bank, been downgraded to an upper-middle income country. This rating is still better than that of the majority of countries today, but its relative position is a far cry from scarcely 100 years ago, when its wages rivalled those of the UK. In terms of prosperity, the nation has failed to maintain its position among the European and North American economies it once rivalled. Income per capita is now on average 43 percent of that of the world’s richest nations, among whom it once ranked.”

“The last few years under the presidency of Cristina Kirchner included polices such as “instituting capital controls, running down foreign exchange reserves, [and] in effect having the central bank print money to finance a public deficit”, according to the Financial Times. While these wrongheaded policies were for a while hidden by a world commodity boom, after commodity prices went into the doldrums, the full extent of Kirchner’s economic mismanagement has become apparent.”

Then we move to inflation: Inflation rates in Argentina

“The inflation rate for consumer prices in Argentina moved over the past 42 years between -1.2% and 3,079.8%. For 2022, an inflation rate of 94.8% was calculated.

During the observation period from 1980 to 2022, the average inflation rate was 206.2% per year. Overall, the price increase was 902.38 billion percent. An item that cost 100 pesos in 1980 costs 902.38 billion pesos at the beginning of 2023.

For October 2023, the year-over-year inflation rate was 142.7%.”

Argentina External Debt To GDP

Argentina devalues peso, cuts spending to treat fiscal deficit ‘addiction’ | Reuters

“Argentina will weaken its peso over 50% to 800 per dollar, cut energy subsidies, and cancel tenders of public works, new Economy Minister Luis Caputo said on Tuesday, economic shock therapy aimed at fixing the country’s worst crisis in decades.

Caputo said the plan would be painful in the short-term but was needed to cut the fiscal deficit and bring down triple-digit inflation, as he unveiled a package of measures after libertarian President Javier Milei took office on Sunday.

 “The objective is simply to avoid catastrophe and get the economy back on track,” Caputo said in a recorded speech.

He said the country needed to tackle a deep fiscal deficit he put at 5.5% of GDP, adding Argentina had a fiscal deficit for 113 of the last 123 years – the cause of its economic woes.

“We’re here to solve this problem at the root,” he said. “For this we need to solve our addiction to a fiscal deficit.”

We could go on citing articles – please note that we try to make our sources easy to find and check.  Probably the biggest fact we’ve mentioned is that Argentina has ran “a fiscal deficit for 113 of the last 123 years.”  Over a century of irresponsible or incompetent fiscal management brought Argentina to a spot where the voters chose to elect a president who recognizes that government is not working. Just to bring the Argentine budget deficit better into focus, the US record shows six years of budget surplus since 1969 (gotta give Bill Clinton some credit).  It may not be time for a libertarian government in DC – but we are getting closer to realizing that poor accounting doesn’t lead to prosperity