Javier Milei, new President of Argentina
I'm sure many that pundits are drawing comparisons among the right-wing populist movements og Trump, Milei, Wilders, and others. If there is a common element, perhaps it's a reaction to Statist leftism. Arhentina is suffering from economic chaos and a high inflation economy where nearly a third of citizens' livelihood is tied to State disbursements. The Dutch uprising seems tied to the effects of high immigration in a welfare state along with the burden of the EU burearucracy and the high costs of the climate change agenda. Like the US, Argentina has been historically pro-immigration, I did a search on the issue for Milei. I didn't notice anything similar to Trump's Muslim ban, but Milei's Friedman-like concerns of immigrants being drawn by generous social welfare policies. Of course, Trump was elected in a low-inflation economic expansion. If he did tap into something comparable, it probably dealt with a growing middle-class disenchantment with the political establishment, decisionmaking of the elite unresponsive to their key concerns. Trump was not vested in the status quo: he was an outsider. In a similar way, Milei has outsider credentials and opposed leftism, which dominated the status quo.
To be sure, Milei and Trump differ on economic policy, except possibly on tax reform. Milei is an Austrian School economist who e.g., favors free trade and a free banking system. If you listen to the first clip, you'll hear Milei speak articulately on the nuances of prospetive dollarization, discuss the precedents of Ecuador and El Salvador, etc. This is not like Donald Trump running for Commander in Chief but unable to discuss the nuclear triad strategy. I'm not going to put words in Milei's mouth, but I don't think as a matter of principle he would agree with Trump's tariff war with China, his lobbying the Fed Reserve to set negative interest rates to enable a beggar-thy-neighbor foreign trade war or his mercantilism update of NAFTA which targeted Mexico auto workers and imposed quotas, so, e.g., Canadian infant formula suppliers could not ship poduct during the recent shortage. In relation to the latter point, he criticized South American trade pacts as politically corrupt, playing to the advantage of politically connected suppliers. That being said, Milei wants good US relations and will find some way if necessary to deal with Trump's massive ego and economic illiteracy.
Let's not underestimate the difficulties Milei wll face with possibly unrealistic expectations and a legislature not dominated by like-minded fellow reformers. [Trump inherited a GOP Congress and never proposed an austere budget. He had no intention of tackling unpopular senior entitlement reforms.] One can remember how newly elected President Reagan inherited Volcker's sky-high interest rates, which didn't help his job approval on the economy in the short term. To be fair, Milei is trying to reset expectations warning of shock therapy to the economy in the short term; what does that mean?
- "weakened the official exchange rate to 800 pesos per dollar, Economy Minister Luis Caputo said"
- "The government will slash spending equivalent to 2.9% of gross domestic product"
- "Cuts to energy subsidies will save 0.5% of GDP, while reductions to transport subsidies will save 0.2%
- "Reductions in social security and pensions to save an additional 0.4% of GDP. The government plans to end indexation of pension payments"
- "Halving the number of ministries, cutting transfers to provinces and suspending public works. At the same time, Argentina will boost certain social welfare programs, Caputo said."
