No need to cry for Argentina

Argentina’s congressional elections in October brought victory for President Javier Milei and a broad confirmation of his policies.

President Milei has introduced reforms in Argentina that were long overdue – the kind that are overdue in the United States and Europe as well.

Expedient politics that buy votes through excessive clientelism, combined with an oversized, overcontrolling state, have eroded responsibility and rationality. In Argentina’s case, this mismanagement was exponentially enhanced by corruption camouflaged in socialist ideology during the Kirchner-Fernandez era. It cannot be denied that European governments, too, have hidden their expedient mismanagement behind the feel-good argument of “social justice.”

Argentina has the potential to be one of the most prosperous nations in the world, but it has sunk into misery over the decades, with more than half the population falling into poverty. Many Argentines eventually recognized the failures of misguided politics and embraced economic and social common sense. President Milei convinced his compatriots that a return to prosperity requires a market economy and limits on government. The fact is that only market economies – and the acceptance of material inequality – make a functioning social system and broad prosperity possible.

Unfortunately, Europe continues to pursue policies similar to those that brought Argentina to ruin.

 

Mr. Milei has significantly reduced poverty, brought inflation under control and managed to stabilize the peso somewhat. These are major achievements. An unfriendly parliament, however, has frustrated part of his reform program. There have also been losers, mainly the profiteers of left-wing ideology, largely concentrated in the Buenos Aires region.

The medicine needed to restore economic health is often bitter. Not all measures succeed immediately, and interim hardship is inevitable. The free market also means that less productive businesses struggle, a painful but necessary correction. This reality has prompted many promoters of the old clientelist system – in politics, academia and the media – to proclaim, often with satisfaction, that Mr. Milei is failing.

Provincial elections in Buenos Aires favored the left-wing opposition, whose adherents celebrated what they called Mr. Milei’s failure. European media predicted with similar enthusiasm a disaster for him in the congressional elections. They were proven wrong. Many observers underestimated the good judgment of Argentines willing to endure short-term pain for a brighter future.

Unfortunately, Europe continues to pursue policies similar to those that brought Argentina to ruin. Implementing the necessary reforms would end the careers of most current political players – both individuals and parties – so the destructive path persists, while Argentina’s example is ignored.

We can only hope that European citizens will assume responsibility and exercise their civic and democratic duties as the Argentines now do. That will mean holding the system accountable and accepting tough cuts in public spending to restore market-based prosperity for all.

At present, there is no need to cry for Argentina – but rather for Europe.

This comment was originally published here: https://www.gisreportsonline.com/r/argentina-economic-reform/