Deregulation in Argentina: Milei Takes "Deep Chainsaw" to Bureaucracy
53 comments
·March 25, 2025ryandamm
arunix
What's the difference between Japan and developed?
palsecam
The “Lost Decades” (1990–2010), during which Japan GDP hardly grew and deflation occured: https://en.wikipedia.org/wiki/Lost_Decades
tim333
Prior to that they had an 'economic miracle' from WW2 till then which is probably more what people refer to. The lost decades are quite easy to understand with conventional economics - they had a property and stock bubble which got everyone left with huge debts when it collapsed.
ryandamm
Or to put it another way: extreme steps were probably required in Argentina to tackle a truly hidebound, rentier-dominated and corruption riddled government. Inflation expectations were strong and justified. Government deficits were out of control. And the population was truly ready to bear some pain for the sake of reform. (Source: My guide in Argentina this past November; Milei’s approval rating has stayed high despite economic contraction.)
Argentina is what Trump’s team imagines the US to be. They’re not the same.
EDIT: fixed some typos.
adamtaylor_13
Why aren’t they the same? They look the same to me.
andybak
Unless you're not looking very hard I presume you're making a polemic point here. i.e. it's not a good faith response to the person you're replying to.
They are obviously saying "the differences are significant enough for these measures to be misplaced" and you probably mean something like "I think the differences in these areas are closer than you claim".
So - go ahead and make the argument you intended to make so we can engage with it.
DrFalkyn
The Argentinian peso not being the worlds reserve currency for starters
bluGill
Many of the things Argentina is doing are getting Argentina closer to what the US was. Labor unions have much less power in the US - and so the US was not seeing the problems of a too powerful labor union (or at least not near as many, depending on if you are pro or anti-union you will also argue if we are seeing problems with too weak a union)
In particular Argentina is moving to free trade, while Trump is moving away. Trump also isn't working within the law/constitution to make his cuts while it appears Argentina is.
tim333
The US economy pre Trump was one of the best performing in the developed world, the Argentinian one one of the worst. There's a saying - if it ain't broken don't fix it.
lezojeda
>Inflation expectations were strong and justified. Government deficits were out of control. And the population was truly ready to bear some pain for the sake of reform
We went from 25% inlation where prices changed every single week to discussing whether the government will be able to lower inlation from a monthly 2% (still high, o course). The goal post was moved but I'm just glad not to have prices change every week, it was complete madness. And the 2% is the average, of course, you can find some prices the same as they were 2 months ago.
ryandamm
Would love to hear more from Argentinians! Thank you for your perspective.
weberer
>That facilitated more disciplined monetary policy and the reduction of inflation from 25 percent per month when the president came to office to 2.2 percent in January 2025.
25% is ridiculously high even for a yearly inflation rate. But to have it monthly means the value of the currency halves every 3 months. I thought there must have been a typo somewhere, but sure enough, that is the correct value.
ryandamm
It has been significantly higher in the recent past.
For fun, look up how Brazil tamed inflation by creating a fake currency it never actually issued. (Taking off so no time to look it up myself.)
gus_massa
Probably "How Fake Money Saved Brazil" http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake... A few old discussions with 800 comments in total https://hn.algolia.com/?q=How+Fake+Money+Saved+Brazil
After some time, they actually issued the bills of the new fake money that magically got real (pun fully intended).
Here in Argentina we had almost simultaneity the "Convertibility Plan" https://en.wikipedia.org/wiki/Convertibility_plan <voice="Mingo"> One (AR)Peso equal to One (US)Dollar</voice>. It was successful to reduce the inflation but it was hard to drop the peg later and it caused a lot of problems.
The current government is "crawling peg", of 2% reduced recently to 1%, so people does not get attached to a magic number. (It may be brilliant or a disaster, we will know in 10 years.)
piva00
I lived in Brazil during hyperinflation, and the transition to the Real. During that time we would go buy groceries at the first moment after a paycheck, filling up carts to last as long as possible because prices would be changing not just every day but a few times a day, grocery stores would employ people whose only job was to remark prices on the shelves in the morning, afternoon, and evening.
At the time I don't think many people believed that yet another currency change (we had gone through the Cruzado, to Cruzado novo, to Cruzeiro, to Cruzeiro real in a span of 8 years) would solve it, I was too young to understand the plan and it just felt like another annoying swap of currency I needed to do.
The URV (real unity of value) was this abstract thing we could use as benchmark against the previous currency (Cruzeiro real) and the new one being introduced (Real, the one living to this day), the more sweeping changes were broad fiscal reforms, and removing the stupid indexation between prices and wages.
lezojeda
[dead]
ryandamm
The money quote to me (as an American):
“Milei has implemented these reforms legally and constitutionally...”
Panzer04
If this were stated for many countries it would be cause for concern, and it certainly draws parallels to the US - but Argentina's economy has been a disaster forever, and regularly suffers from huge hyperinflation and government defaults.
It seems much easier to justify the argument for radical government cuts and austerity in this environment.
throw0101c
The Money & Macro channel went over the economic history of Argentina recently:
* https://www.youtube.com/watch?v=E7MzfNTSk4A
Milei seems to be part of a regular pattern of swinging back and forth between economic extremes. The author of the video/channel is skeptical that this latest round will do much in the long term (previously things 'worked' in the short term before going off the rails).
(I don't have the knowledge/expertise to judge his analysis, but some of the history/context was interesting.)
ako
At the same time poverty is soaring: https://www.npr.org/2025/02/09/nx-s1-5280631/argentinas-rece...
bitshiftfaced
From your article (dated Feb 9th),
> POLITI: That's right. Under Milei, the poverty rate increased to more than 50%. An even more shocking statistic is that 6 in 10 children live in poverty.
From topic's article,
> and the poverty rate, after having initially risen, has fallen below the 40 percent range that the previous government left as part of its legacy.
rmholt
I wonder if the memecoin promotion helps the Argentinian economy at all https://www.web3isgoinggreat.com/?id=milei-memecoin-promotio...
cs702
Economic conditions in Argentina were exceptionally horrible before Milei, and now they are... ordinarily bad. It looks like progress!
Alas, I'm always a bit skeptical of any piece published by the Cato Institute, because it is not exactly an impartial source. The Cato Institute always advocates for lower taxes, less government, fewer business regulations, fewer consumer protections, and fewer restrictions on personal behavior. Always, regardless of the specifics.
When it comes to economic policies, I prefer to see pragmatism over ideology. If something works, do it; if it stops working, stop doing it. In the words of Lee Kuan Yew, who led the transformation of Singapore from one of the poorest to one of the wealthiest societies on earth:
> My life is not guided by philosophy or theories. I get things done and leave others to extract the principles from my successful solutions. I do not work on a theory. Instead, I ask: what will make this work? If, after a series of solutions, I find that a certain approach worked, then I try to find out what was the principle behind the solution. So Plato, Aristotle, Socrates, I am not guided by them…I am interested in what works…Presented with the difficulty or major problem or an assortment of conflicting facts, I review what alternatives I have if my proposed solution does not work. I choose a solution which offers a higher probability of success, but if it fails, I have some other way. Never a dead end.
> We were not ideologues. We did not believe in theories as such. A theory is an attractive proposition intellectually. What we faced was a real problem of human beings looking for work, to be paid, to buy their food, their clothes, their homes, and to bring their children up…I had read the theories and maybe half believed in them.
> But we were sufficiently practical and pragmatic enough not to be cluttered up and inhibited by theories. If a thing works, let us work it, and that eventually evolved into the kind of economy that we have today. Our test was: does it work? Does it bring benefits to the people?…The prevailing theory then was that multinationals were exploiters of cheap labor and cheap raw materials and would suck a country dry…Nobody else wanted to exploit the labor. So why not, if they want to exploit our labor? They are welcome to it…. We were learning how to do a job from them, which we would never have learnt… We were part of the process that disproved the theory of the development economics school, that this was exploitation. We were in no position to be fussy about high-minded principles.
Source: https://www.amazon.com/gp/product/0262019124
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Note: I'm not sure why the OP is flagged. It meets HN criteria.
LittleTimothy
I find the Libertarian obsession with Argentina quite curious. There seems to be this view that Argentina is massively over-regulated with massive government and that if you strip that all away Argentina will be a power house of productivity and wealth. The problem I have with that is... that's not libertarianism. Thinking that Argentina should be regulated and taxed a bit more in line with a modern liberal European democracy is not a demonstration of the successes of Libertarians. I would think that the libertarian would be far better pointing at a low regulation, low tax economy and demonstrating how reduced regulations would help there. Maybe for example, take the US banking regulations and strip them away - if the libertarians are right, we'll see a boom lifting all boats. If they're wrong we'll see a string of notorious and massive scams ripping of the average American. Unfortunately that'll never happen so I guess we'll never know.
Bostonian
Summarized and discussed at https://marginalrevolution.com/marginalrevolution/2025/03/ar...
oblio
Watch this if you can:
https://youtu.be/E7MzfNTSk4A?si=DRLFJ-yQ2lOVgL9J
Great insight into the situation from a professional economist, his videos are based on academic research but presented in an approachable manner.
owenmakes
Don't. The video misses out on a lot of key facts from previous governments.
throw0101c
1. It's hard to fit a hundred-year history of a country in a twenty minute video.
2. Are there certain "key facts" that should have been brought up even in the limited allotted time that you can bring up here/now?
cess11
Tax to GDP ratio in Argentina before Milei was below OECD average, presumably cut down further now, and the country will go into debt with the IMF anyway.
Aren't the Kochs big on fossil fuels? Surprising the article doesn't mention what Milei aims for in that area, or the Atlas Network connections they have to him.
Before anyone starts comparing to the US’s DOGE, let it be said that the two countries have virtually nothing in common economically.
Argentina has a nearly century-long history of economic volatility alternated with stagnation, massive inflation crises, a spell of military dictatorship (after a flirtation with fascism)…
Wait a second…
(In all seriousness, Argentina is truly unique. As economists say, there are only four kinds of economies in the world: developed, developing, Japan, and Argentina.)