Greetings from Argentina you freedom-loving nostriches.
Happy New Year! Feliz Año Nuevo!
Javier Milei has published an editorial for La Nación on Argentina's macroeconomic progress in 2024.
Yet another masterclass from the legend. 2025 is going to be massive for Argentina. LFG
Read the translation here:
"When you browse through books on economic growth, you'll find they nearly all share the same quote from Robert Lucas Jr. In a 1985 lecture in Cambridge, he said: “Growth rates of per capita GDP vary… While India’s income doubles every 50 years, Korea’s does so every 10. An Indian will be, on average, twice as well off as his grandfather, while a Korean will be 32 times better off… I don’t understand how you can look at figures like these without seeing that they represent possibilities.”
This raises a key question: could the Indian government take steps to achieve Indonesia- or Egypt-like growth? If so, which ones exactly? If not, what is it about ‘the nature of India’ that stands in the way? The human implications of this question are staggering—once you start to think about it, you can’t think about anything else.
Naturally, the same question applies to Argentina and any other country aiming to raise its citizens’ standard of living. In Argentina’s case, it’s even more relevant: in the early 20th century, we were among the world’s five richest countries. By 2023, however, we had fallen to 113th in per capita GDP, with poverty at 54.8% and extreme poverty at 20.2%. These figures alone are enough to illustrate the critical importance of economic growth.
This debate is hardly new. As early as 1776, Adam Smith showed that a blend of free markets (the “invisible hand” and its connection to property rights), economies of scale (the pin factory), technological progress, learning by doing (specialized human capital), combined with a minimal State and sound monetary policy (the gold standard), would bring about prosperity. But this hopeful vision was overshadowed by Thomas Malthus’s darker theory of diminishing returns.
Later, in the late 19th and early 20th century, economists began recognizing Malthus’s mistake. However, the Great Depression and the work of John M. Keynes shifted the debate for half a century—until Paul Romer and Robert Lucas Jr. reignited it. Their ideas built on the contributions of Harrod, Domar, Solow, Swan, Uzawa, Hahn, Phelps, Cass, and Koopmans. In 1989, Mankiw, D. Romer, and Weil provided empirical evidence placing not just physical capital but also human capital front and center in the growth discussion.
So, what have we learned from all this that can help pull our country out of the pit created by a century of socialist populism? First, we’ve learned that stability is vital for growth. Perpetual fiscal deficits, inflation fueled by money creation, and external imbalances—alongside exchange rate gaps, loss of reserves, and mounting debt—form an explosive combination that keeps us perpetually teetering on the brink, undermining any long-term planning.
In this regard, eliminating the fiscal deficit (in the Treasury) and the quasi-fiscal deficit (in the Central Bank) has curbed the need to print money. As a result, monthly wholesale (retail) inflation has dropped from 54% (25.5%) to 1.4% (2.4%). This has been achieved (i) without asset expropriations, (ii) without price controls, (iii) by adjusting tariffs, and (iv) without fixing the exchange rate—in other words, all while respecting property rights. If we remove the inflationary effects of a crawling peg exchange rate, wholesale prices would actually be in deflation and retail prices would be flat. Inflation is therefore on its way out, taking with it the distortions that erode incomes and discourage investment.
At the same time, reducing the fiscal deficit has led to a sharp drop in country risk. Around the time of La Libertad Avanza’s victory, that risk hovered around 3,000 basis points. It dipped to 1,900 when the new administration took office, and now, after a full year of balanced finances, it sits at about 600. This is no small detail: when country risk goes down, domestic interest rates follow suit, which in turn lowers the cost of capital for companies. As a result, valuations can surge (up 200% this past year) and new investments flow in. In turn, per capita capital stock rises, boosting labor productivity and ultimately leading to higher wages—which, in turn, drive down poverty and extreme poverty.
But this is more than just rhetoric. A recent study by Juan Pablo Nicolini shows that simply achieving fiscal balance alone ensures an annual per capita growth rate of 4.5%, meaning GDP per capita would double in just 15.6 years.
However, as the author himself notes, the study doesn’t address how that balance is achieved. It makes a difference whether it’s reached by cutting public spending or by raising taxes—not just for allocation and welfare (utility) reasons, but also because the consolidated adjustment effectively returns (or stops siphoning off) 15% of GDP back to Argentines.
Naturally, not all of these gains will be saved, but savings will still go up, allowing for more investment and growth. In this sense, the fiscal improvement sets a significant foundation for growth, especially given Argentina’s history. As the economy expands, taxes can continue to be reduced, further fueling growth and freedom.
Finally, there are the structural reforms. By implementing DNU 70/23 and the Ley Bases, Argentina has enacted a reform package eight times larger than the one under Menem, lifting the country 70 spots in the economic freedom rankings. This is significant: freer economies not only grow twice as fast as those under heavy restrictions, but they also have per capita incomes 12 times higher and 50 times fewer people living in extreme poverty. These changes didn’t end with those two major milestones, either: an average of 3.5 regulations are repealed per day, expanding both our freedom and our incomes.
All of this amounts to the most ambitious transformation in Argentina’s history. Combined with reforms in health, education, labor, and legal matters, and supported by improved security at home and abroad, these developments have made 2024 a turning point in our history. By simply maintaining the measures already in place, 2025 will mark the start of Argentina’s reconstruction—setting us on a path to reclaim our place among the world’s leading nations after 40 long years.
Original link for La Nación article:
LA NACION
Opinión | El retorno al sendero del crecimiento
En esta columna, que envió a LA NACION, el Presidente explica su visión del rumbo de la economía y la perspectiva de cómo debe seguir el proces...
STREAMLINED GOVERNMENT & DEREGULATION
Deep Cuts: A relentless audit will slash public spending like never before, trimming the state to a lean, effective machine. Expect the ax to fall on unnecessary agencies, secretariats, and publicly-owned firms. Tasks that don’t belong to the National State? Gone.
ECONOMY & MONEY MATTERS
Tax Overhaul: Prepare for a 90% reduction in federal taxes and the return of full tax autonomy to the provinces—ending a long-overdue federal stranglehold.
End of FX Restrictions: By next year, currency controls (“cepo”) will be history. The Central Bank’s reserves issue will find a permanent fix, potentially through an IMF deal or private agreements.
Currency Freedom: You pick the currency. Argentines can buy, sell, and invoice in dollars—or any other currency—except taxes, which still must be paid in pesos (for now).
Investment Boost: With a sound fiscal framework, major investors are lining up. Over $11.8 billion in approvals are pending, and more billions are on the way in sectors like infrastructure, mining, steel, energy, automotive, tech, oil, and gas.
INTERNATIONAL TRADE REBOOT
Mercosur Revamp:
Strip away tariff barriers within Mercosur’s internal market.
Slash the common external tariff that drives up prices.
Pursue a U.S. free trade agreement next year—something that should’ve happened 19 years ago.
TOUGH ON CRIME & SECURITY
Repeat Offender Law: Criminals who commit crimes again will face stiffer penalties.
Anti-Mafia Legislation: Inspired by the U.S. RICO law, this measure aims to dismantle organized crime networks.
Lowering Criminal Age: Offenders old enough to understand their wrongdoing are old enough to face the music.
Federal Police Revamp: The new model? An Argentine FBI—streamlined, technologically advanced, and laser-focused on national and international threats. Not the toothless version previously floated.
Anti-Narcoterrorism Unit: A specialized force will tackle drug trafficking in the triple border area, with support from neighboring Mercosur countries.
POWERING THE FUTURE: NUCLEAR & AI
Argentine Nuclear Plan: A bold nuclear agenda will include new reactors and research into small, modular reactor tech. Stay tuned for Dr. Reidel’s plan, set to put Argentina back at the cutting edge.
ELECTION YEAR WITH A TWIST
No Vote-Buying, Just Results: Instead of splurging to win votes, the government will stay the course on fiscal adjustments, cutting taxes, and returning wealth to the private sector. A complete tax reform is on the horizon—no pandering, just progress
Abrazo de Libertad!
