In Argentina, Javier Milei faces the test of economic realities

In Argentina, Javier Milei faces the test of economic realities
In Argentina, Javier Milei faces the test of economic realities

En February 2019, during a cosplay event, where people dress up as a fictional character, Javier Milei, then an economist little recognized by his peers and a polemicist, caused a furore with his superhero character: “General Ancap”, for “anarcho-capitalist”. At that time, he had not entered politics and the Partido Libertario (Libertarian Party), of which he is the main figure, was only four months old.

Five years later, the eccentric “liberal libertarian” claiming to belong to the Austrian school (ultraliberal economic school of thought), who repeatedly cites the neoliberal Nobel Prize winners in economics Friedrich Hayek (1974) and Milton Friedman (1976). ), presides over the destiny of Argentina. His chainsaw, a campaign emblem which was to cut public spending and carve out the State, was started as soon as he was inaugurated, on December 10, 2023. “There is no alternative to austerity. There is no alternative to shock”he then declared to his supporters.

In the days that followed, Javier Milei announced a government reduced to nine ministries, compared to eighteen previously, a devaluation of more than 50% of the Argentine peso and signed, on December 20, a decree deregulating many sectors of the economy. from the country. His crusade to restore order to an Argentine economy undermined by inflation, which was then galloping at 160% per year (from November 2022 to November 2023), was launched.

Also read the analysis (2023): Article reserved for our subscribers Argentina, a country in an impasse due to lack of political vision

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After five months in power, did Javier Milei have to hand over the mantle of General Ancap? “Market failures do not exist”, he assured in Davos (Switzerland), on January 17, in line with his current of thought, which advocates almost zero state intervention. However, the Argentine president has already had to revise his copy on many aspects.

Central battle

The deregulation of the cartelized private health market that he decided is an example. The ten companies sharing 83% of policyholders quickly agreed on price increases well above inflation, pushing many middle-class families to abandon their private health policies. On April 5, the Minister of the Economy, Luis Caputo, admitted, during an interview on the TN channel, that insurers had had the “heavy hand”. A few days later, he announced that the market would once again be regulated by the State and required companies to reverse course. Same type of decline in energy, where the increase in prices, planned for the beginning of May, was postponed so as not to fuel inflation.

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