Argentine President Javier Milei has just eclipsed the six-month mark of his administration. As he campaigned, he frequently held up a chainsaw to illustrate his commitment to massive cuts in government spending. Prior to his presidency, the Argentine economy faced high inflation and economic uncertainty.
In his initial policy reforms, he devalued Argentina’s peso by 50%, slashed state subsidies for fuel, and cut the number of government ministries by half. He committed to doing the hard work necessary to fight inflation.
Milei campaigned on other promises like replacing the peso with the U.S. dollar and abolishing the central bank. He has been able to put some of these concerns on hold due to the need to solve inflation first. This is the mark of a true leader, someone willing to prioritize problems in order to solve the most pressing issue first. This is something many members of the U.S. Congress could work on.
Milei is culling the bureaucracy, something Congress has repeatedly failed to do. Milei asked Congress to grant him the power to privatize more than two dozen state-owned companies, including the state airline, the railways, the postal service, and the national water supplier. He is directly acting on his promise to make the government smaller. This move has led to increasing flak from many unions in spite of the documented positive impact of many of Milei’s policies.
The International Monetary Fund has given Argentina praise, saying that their economy was “better than expected” and that its economic program was “firmly back on track.” This praise marks the moves of Argentina to shift toward a more capitalist mindset where they can allow the market to function without government intervention. Economist Arnold Kling argued that despite some of the downsides of markets, some ”Markets fail. Use markets.” That’s because “entrepreneurial innovation and creative destruction tends to solve economic problems, including market failures,” Kling said.
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Milei has already greatly improved Argentina after just six months in office. He took one of the highest inflation rates in the world down to single-digit inflation. He has taken the bond market to renewed heights with the market posting its first quarterly surplus since 2008. Throughout these changes he has maintained high popularity, with his approval rating remaining above 50%.
Milei’s reforms will help private investors overhaul the economy. He has created a model for cleaning up big government and rapidly reducing inflation. It is a model for other economies looking to right their own ships.