Will Milei Make Argentina Great Again? (BRYAN CAPLAN, JAN 18, 2024, Bet on It)

As far as “emergency” measures go, Milei’s labor deregulation is notably mild: It lengthens new workers’ probationary period from three to eight months, cuts severance pay, and threatens dismissal for protesting workers who block traffic. But so far, these proposals have provoked the strongest pushback. The CGT, Argentina’s leading labor union, insists that the “only purpose” of these “ferocious” and “regressive” measures is to “hamstring union activity, punish workers and benefit business interests.”[viii] An Argentinian court almost instantly suspended Milei’s emergency labor deregulations, though perhaps he’ll win on appeal. The privatizations will be more significant if they happen, but since he declined to put them in his emergency decree, they’ll have to pass both houses of Argentina’s legislature.

What is the most likely scenario for Argentina? The monetary and fiscal stabilization is very likely to work. Argentina has faced far worse crises before: The hyperinflations of the 70s to the 90s multiplied prices 100 billion times. That’s like turning a billion dollars into a penny. Yet Argentinians ultimately overcame all these problems and more using the orthodox medicines of monetary restraint and fiscal responsibility. Since even politicians who ideologically opposed these treatments ultimately endured their short-run costs, it is a safe bet that a libertarian economics professor will do the same.

Turning Argentina, just a cut above Venezuela and Cuba in economic freedom, into a bastion of free-market policies is far less likely. Milei’s party, La Libertad Avanza, has a tiny share of the seats in both houses of the legislature, and all of his allied parties are clearly less libertarian. While Argentina did have much more pro-market policies in the 90s, this was part of the global anti-socialist wave after the Soviet collapse.[ix] Admirers of the neighboring Chilean economy may note that Milei is much more ideologically committed to free-market policies than Pinochet ever was. Like many politicians, he is acting on the adage, “Never let a good crisis go to waste.” But Milei plainly has far less power to remake his country than the Chilean dictator.