The economic effectiveness of Milei’s recipe measured by the variation in inflation is wrong and specious. Milei devalued the Argentine peso at the beginning of his term. It is clear that this necessary decision has important inflationary consequences during the first year; however, a more objective reading of the data would not have omitted considerations on the future trend of inflation that would be obtained by projecting the most recent monthly data over the next 12 months: annual data are expected in double digits and not in 3 as highlighted in the defeatist title of the article.
Inflation It is a hidden tax, it is the price paid, through the decrease in the purchasing power of money, for what was thought to be free: the services provided by the state, financed in deficit and therefore in debt, not covered by tax revenues. Exactly what happened in the disastrous socialist Argentina of the last 100 years.
Milei, as a good Austrian School economist, is well aware of this mechanism. His government action is therefore aimed at definitively cease the statist and welfare approach of the State to obtain a series of positive consequences: the stabilization of the internal value of the Peso (reducing as much as possible unproductive public spending) and the consequent stabilization of the external value of the Peso (to bring foreign private investment back into the country). The ultimate goal is to minimize state intervention in the economy compared to the Peronist monstrosities, and the restoration of an economy based on the natural laws of the free market.
It can be argued that Milei’s current policies are the destructive phasenecessary to dismantle the socialist model of the Argentine Republic. This inevitable phase will be followed by the construction phasethanks to the probable influx of foreign capital and the liberation of free market forces, a premise for the economic growth that almost all research institutes are attributing, for the next few years, to Argentina and that the Buenos Aires Stock Exchange has been anticipating for months with the index (although devalued by the peso) having risen, in a few months, from 600 points to the current 1,600 points: a growth, this one, in the 3-digit range!
Milei’s “experiment” can and must be considered the most interesting in the last 40 years of global economic policies in Western democratic countries after the extraordinary and historic periods of economic growth in the 1980s in the United States, Great Britain, New Zealand and Israel, inspired by similar liberal principles of today’s Argentina. The hope is that these policies will not be described inappropriately, if not opposed, but that, instead, they will be “copied” also and above all in those countries with high debt, high taxation and public spending like Italy so that state intervention in the economy is reduced and market forces are left free, which, it should be remembered, always act in favor of the real interest of the consumer.
Andrea Bernaudo
President of Italian Liberals
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