Last Sunday, Argentina experienced a political earthquake of major proportions. The libertarian economist, Javier Milei, won in a run-off election over another economist, Sergio Massa, the current Minister of Economy of the ruling party. The election has great significance for Argentina, the region, and even for Puerto Rico.
In the first instance, it is not every day that two economists aspire to preside over one of the largest economies in Latin America.
Secondly, Milei's election breaks all the molds of the predominant political and economic current in Argentina during the last two decades, governed under the hegemony of the Kirchner family, first Néstor Kirchner (2003 - 2007) and then his wife, Cristina Fernández De Kirchner (2007 - 2015). Under the Peronist vision, both rulers failed to establish a framework of macroeconomic and fiscal stability that would provide Argentines with a good quality of life. Let us recall that, in 2001, Argentina entered into a major crisis when it defaulted on its foreign debt, which resulted in a major social and economic crisis in the country.
Thus, in the context of an inflation rate of 145%, indebtedness and an accelerated deterioration of the Argentine economy, the figure of economist Javier Milei emerged as a new player in the political scenario of the South American country and with the promise of implementing liberal policies to get the country out of the stagnation in which it finds itself.
Javier Milei's policies and proposals have caused a stir in the region and in the world, because they are based on what is known as classical economic liberalism, better known as libertarian policies (Natacha Pisarenko).
His party, "La Libertad Avanza", proposes a program of economic measures, such as cutting public spending by 15%, dollarizing the economy, reducing ministries, eliminating the central bank, handing out educational vouchers and breaking trade relations with Brazil and China, two important global commercial players and one, its immediate neighbor. Milei's measures break with the Peronist economic vision of big government, excessive state regulations, high public spending, high taxes and indebtedness. Peronism was the political and economic doctrine developed by Juan Domingo Perón during his presidency from 1946 to 1955 and 1973 to 1974.
In essence, Milei's economic philosophy represents an uncertain economic experiment for a nation that for much of the 20th century and the first two decades of the 21st century, has been governed by statist economic policies, that is, the state as a major economic actor. Under the presidency of Mauricio Macri (2015 - 2019), a market-oriented businessman, some economic reforms were attempted under the concept of gradualism, but were unsuccessful, returning the Peronists to power as of 2020, with the presidency of Alberto Fernández.
Economic liberty as a north.
Javier Milei's policies and proposals have caused a stir in the region and the world, because they are based on what is known as classical economic liberalism, better known as libertarian policies. In essence, this philosophy focuses on the freedom of the individual as a fundamental value within a free society, rejects the role of the state in economic processes, advocates low taxes and a government as small as possible, which does not obstruct the freedom of actors within an economy. Economic liberalism firmly believes that markets are rational enough to act without intervention or regulation and that only then can they produce optimal outcomes for the welfare of society.
Recent leading economists of this school of thought include Milton Friedman (Nobel Prize 1976), Robert Lucas (Nobel Prize 1995), and Friedrich Hayek (Nobel Prize in 1974), among others.
Various groups or think tanks globally and in the United States have conducted analyses and research to establish the impact of economic strategies anchored in economic freedom and have found a strong correlation with indicators of growth and well-being. For example, the Heritage Foundation, based in Washington D.C., created the Index of Economic Freedom to measure the degree of freedom that economies around the world have, using specific criteria.
Puerto Rico in the mirror of Argentina.
Javier Milei's victory has created a local debate revolving around what economic policy route the 2024 electoral cycle should take in Puerto Rico, where two emerging parties such as Proyecto Dignidad -conservative in nature- and Victoria Ciudadana -socialist in orientation- are emerging as possible political movements for change.
Like Argentina, Puerto Rico has been governed for decades by policies similar to those implemented in Argentina: high government spending, confiscatory taxes, high social dependency, high debt, heavy regulation and an active government in the economic life of businesses and individuals. That recipe led us to a great economic depression starting in 2006, and to the bankruptcy of the government in 2017.
Those of us who believe in economic liberty have been clear that Puerto Rico must begin to orient its public policies towards the free market, reduce taxes and attenuate the role of the government in economic activity.
This article was originally published in Spanish in El Nuevo Dia.