How was the poverty rate of Argentina calculated? I expect it is complicated and even more so in Argentina with those crazy inflation numbers and recent regulations slashed
"Based on household income, the National Institute of Statistics and Censuses (INDEC) measures whether they have the capacity to satisfy their food and non-food needs considered essential."
So there's a "Basket" just for food (which is were the 4% monthly inflation figure comes from) and then a "Total Basic Basket" covering food, clothing, transportation, education, and health. Less than 1 TBB is considered poor, from 1 to 3.5 baskets is Middle Income and more than that is High Income.
Right now a TBB is about 600-700 US dollars and the food basket is 250-300, depending on if you use the official or the unofficial exchange rate.
Of note is that this Total Basic Basket doesn't include housing, and renting a 500 square feet appartement in Buenos Aires costs about 500-600 US per month.
I guess what I meant that it was unnerving that the basket was updated just 9 years ago. If it's getting updated every 9 years, that seems suspicious. On the other hand, nobody said how long the definitions had remained unchanged before 2016. If they had remained unchanged for 30 Plus years, I guess I have nothing to worry about.
My thought too. Poverty rates are often reported using country-specific thresholds: what's considered poverty is different in Ethiopia, Argentina, or the US. Why do journalists write about poverty rates without specifying what they mean, and why does Scott repost them without realizing he has no idea what they mean (sorry if I'm wrong)? It's often not even necessarily useful for comparisons over time, since the (real) threshold may change automatically (in some countries it's defined as something like 60% of the median wage) or manually (even if it's defined as something like "essential" goods, what's considered an essential level has surely changed over time). Since it's often defined in a way that depends either automatically or de facto on the average person's living standards, it's often more of an inequality measure than a poverty measure.
A lot has been said about the 53% poverty figure, but that value cannot be easily compared to other countries, even in the region, as they use different thresholds.
Poverty numbers are only useful for tracking change over time, not absolute values
I also worry somewhat about tracking over time in an environment of uneven hyperinflation; it seems like the way the rate is calculated could lag changing prices, or vary based on the fluctuating inflation rate, or etc.
What I’m unclear about is how much actual power he has. He doesn’t have a ruling party behind him as I understand it but how that affects what he can and can’t do I don’t know. Seems an important part of the puzzle though!
He has enough power to put policy items into serious discussion in Congress and the media, but not enough to force everything he wants through peronist opposition. He must make some concessions to the center-right coalition party which helped him win in the ballotage against the peronists and holds about a third of congress.
So if it was up to Milei, he would blow up the central bank, the argentine peso, labour laws, state-owned companies and, why not, the government as a whole with himself included without a second thought. But the enemies of his enemies which are for now his allies believe in a more gradualist approach, so he can't.
Gosh, Peron. Haven't heard that name in a while. This is why comparisons to other economies gets tricky, the political DNA is a critical element in any attempt to drive change. Unless of course you just lock up the opposition...
I think you should disregard American priors on how hard it is to get bipartisan policy passed. The American system is uniquely bad in the extend that it creates zero-sum dynamics
Working as designed! While it makes it hard to fix things, it also makes it hard to break them: which is one reason, I suppose, that the USA did not get into Argentinas bad economic position in the first place.
It wasn’t designed to be hard to do *anything*. It was assumed that Congress would mostly be working together to achieve the central goals of society, the way the board of your department or your movie club or your corporation or anything else works. But at a certain point, American politics became focused on the disagreements between the parties, rather than the agreements, and now there is an incentive to use any veto point you can for anything done by the other party, even if you secretly believe their policy will do more good than harm.
The bill that they did agree on was a good step in that direction, and if implemented might have inspired more good steps being agreed on. Unfortunately somebody decided that his election chances were better if nothing was done about the border this year, and that was that.
In addition to the obvious border security bill, I believe there are many instances of permitting reform and health insurance fixes and things like that, that don’t even get talked about much because they are non-starters.
The Constitution was absolutely not designed with a party system in mind. It was assumed that our Congressmen would avoid partisanship for the greater good of the country. Deeply naive, but I guess you don't know until you know
To be fair, in 1787 they were designing almost entirely from hypotheticals. E.g. nothing like modern party systems existed in the UK, and there weren't any other genuine representative democracies in the world for any jurisdiction larger than a New England town. And hadn't been for a very long time.
So I've personally got a long list of criticisms of what the Framers came up with. But, "how much better could it have come out knowing what _they_ could possibly have known" yields a rather different feeling about the Constitution.
But the Founders abhorred the political parties that existed in Europe the time, even in their nascent state. Obviously, hindsight is 20/20, but it still seems naive for them to think that American politicians were going to avoid the factionalism that existed at the time.
The latest Psmith review, Fears of a Setting Sun, makes it pretty clear that the founders were very aware of the issue of factionalism. George Washington in particular was convinced by the end of his second term that America was doomed and the parties were going to ruin it.
Argentina has more-or-less the exact same kind of "make it very hard to fix and/or break things" system as we have in the United States, with lots of veto points.
This is a big part of why they got stuck in this mess: replacing a bad president embroiled in scandal involves a long and difficult impeachment process that leaves the vice-president in charge anyway, rather than Argentina.
"Nothing gets done" is probably a bad summary of the US system—it's more like "Nothing happens 95% of the time, then someone lucks their way into a big trifecta and every single law gets rewritten all at once". In Argentina, they just finished up a cycle with a huge Peronist trifecta, which is why they're dealing with this mess.
Definitely! In almost all cases, it is easier to break something than to fix it. Any system is likely to produce fewer fixes for things broken then things broken. So it’s generally better to aim at making it harder to break things than easier to fix them.
Even if you are a massive Milei bull, you should still expect Argentinian inflation to outstrip dollar I flatiron by a lot. Better to buy either government bonds or company stocks of Argentina.
Even if ARS inflates faster than USD, you could still potentially profit using call options on the ARS/USD pair. That would give you the right to sell ARS for USD at a price which might be better than the actual exchange rate at the option expiration date. This is very risky though, of course.
Lol, I guess buying the peso might be a bad move either way, then! Unless what happens is something between the two. But I agree with Arie that current inflation is way too high to justify buying the peso as a serious strategy.
You can buy shares in an Argentinian equities ETF. The main drawback of this is that not only does Milei have to succeed, you have to hope that when the opposition inevitably gets back into power that they don’t tear everything down again.
Seems like it should be counted as a failure for Milei's approach if his direct impact is immediately wiped out by his successors. His pitch is, "This is how you fix the mess the last guys left us." But if 'fix' is a temporary holding pattern that goes straight back to the previous trendline, what's the point?
Exactly. If you think Milei's reforms will be recognized as clearly better than his predecessor by the people of Argentina, you should also think that his movement will gain more representation in the next government.
What's frustrating is that the thing we can measure (Milei's electoral popularity at some future date) is a few steps removed from the thing we care about (the efficacy of Milei's economic reforms). But isn't that how it normally goes? Especially in national political economics, we can't run the counterfactual as a control.
If he stays in power long enough, this should not be a problem. All he needs is enough time that the people can see the longer term trends. If they're positive, he'll get the credit even if that's not accurate. If the trends remain negative, then he'll have to convince them that will change or perhaps that it's the fault of his opposition that will not let him do the truly important things.
That's not quite correct: this has to do with *awfully-governed* democracies, specifically any system with center-squeeze. In a plurality-elimination system (e.g. plurality-with-primaries, two-round system, or RCV), there really isn't a way of preventing wild, discontinuous swings in the ideology of the government.
A majority-rule (Condorcet) system, or a rated voting system, wouldn't have this issue because the median voter theorem means policy responds smoothly to changes in public preferences.
If it showcases that it actually improves things notably, then that makes it harder to repeal. If it works well enough in time, then that also makes so he (or someone more aligned with him) is more likely to be re-elected.
Most laws to try to improve an area have this issue, that they can just be repealed and lose ~all of the benefits. You can avoid this somewhat with more gradual transformations, but obviously you're not going to have as much effect.
(But also reverting some of his actions is probably harder, recreating a bunch of governmental ministries is probably harder than it was for him to tear them down.)
Yeah, basically, austerity is for improving the stability of the economy in good times when you can afford to slow down the economy, in bad times you have to suck up deficit spending that's tightly targeted at getting the economy back on track first.
Of course Argentina has been a clusterfuck for a while, so who knows if any of the conventional arguments apply there.
Er. Wasn't that Venezuela doing the oil-economy thing, not Argentina? Wikipedia puts Argentina's mining-related activities (including oil and gas) at 4% of their GDP, hardly "staking their economic fate" on it.
The classic statement of Argentine weirdness is that they thought they were a developed country before they actually were due to an agricultural export boom about a century ago, and ended up with an entrenched welfare state they can't get rid of. I've no idea how accurate/drastically oversimplified that is, though.
I think it's a half-truth. Yes, all the takes about Argentina dropping down development levels is misleading, because during the 'baseline' period (early 20th century) they were propped up by an agricultural export boom.
However, other countries which experienced the same boom (New Zealand and Australia come to mind) and spent a lot on public welfare nevertheless managed to translate that into continuing high income status (while continuing to rely heavily on primary exports).
My intuition is that its not the welfare state as such but more the general quality of government/institutions, which tended to tax the productive part of the economy (ag exports) to fund elite, urban consumption/corruption (as well as welfare). This saps the economy over time, why invest in increased production when the government expropriates a third of your soy export revenue. Poor institutions also showed up in mismanagement of the monetary system that depresses investment.
In terms of foreign exchange, Australia largely pivoted to mining; it has an absurd quantity and diversity of mineral reserves relative to its population. New Zealand is even more reliant on agricultural exports than Argentina is (although it also makes a fair bit from tourism these days); it had a rough time in the 1970s and 1980s before becoming pretty much a model country for foreign investment, and it's the world's least corrupt country (and even then, it hasn't become ultra-rich - living standards are somewhere in the Spain-Italy range). Not sure how viable either of those would be for Argentina (although Chile could probably learn some things from Australia).
Yeah fair points, no two countries are ever going to be perfect parellels (for one, NZ and Australia were somewhat insulated economically by being part of the British Commonwealth, at least until 1970 or so). I'm not really trying to say what Argentina could do today, just speaking against the idea that Argentina's problem was primarily a welfare state that couldn't be supported after agriculture prices dropped.
I'd push back on Australian mining a bit. According to this: https://ourworldindata.org/grapher/natural-resource-rents?country=ARG~AUS it wasnt until the 21st century that Australia moved ahead in a big way (in absolute terms and compared to Argentina) in natural resource rents. I think its another case where superior institutions/government helped; Australia simply managed the windfalls more wisely than Argentina. Probably does help explain why Australia is so much richer than New Zealand today (unfortunately for me as a Kiwi!).
“ why invest in increased production when the government expropriates a third of your soy export revenue”
Because you get the other two thirds. Like… the government likely takes about 20% or more of your income. Presumably you still maintain employment. Hell, I bet you still seek higher income.
I mean, obviously there is still some incentive to produce. But directionally, yes of course a tax on revenue reduces production at the margin, particularly discouraging long term investments.
More concretely, if there is a potential investment to increase production by 10%, you'll do it if it costs 8% of your current revenue. However if the government takes a third of the increased revenue, you won't.
If you think about it, you're basically arguing the supply curve for crops is vertical, and therefore prices don't effect production.
Argentina's big export sector is agriculture. I'm having trouble finding the article in IIRC the WSJ but apparently one of the things that makes the country incredibly weird is that is has *enormous* regional and sectoral disparity in productivity, so much so that they adopted different exchange rates for different classes of transaction to try to address the lopsidedness that it created.
In essence, AIUI Argentina and especially the pampas plains are basically comically productive and support a robust export market, which would normally cause currency appreciation as it creates external demand for pesos to buy ag sector exports.
But the ag sector in Argentina, like that in other countries, is capital (especially land) intensive without being commensurately labor intensive, so you still have most of the population living in urban centers and working in things other than ag, and Argentina's other sectors are nowhere near as productive or competitive as their ag sector, but would by default find themselves saddled without the capacity for currency depreciation to make them internationally competitive because the ag sector's productivity saddles them with the same peso. This is basically the same problem that Germany and Greece both using the Euro causes, except in this case it's not an inter-country currency union, it's intra-country.
Argentina tried (not sure if they still do this) to alleviate this with ag-sector specific exchange rates to try to deal with the issue -- which is a conceptually bizarre approach done by basically no one else -- but I believe that it's one among the innumerable other problems that contribute to the Argentinian economy making no sense and being unable to effectively equilibrate.
I don't see how "currency depreciation to make them internationally competitive" would be good for Argentine urban workers. You can always stay competitive by accepting whatever pay you can get on the market. Currency devaluation allows you to get higher wages or avoid a wage cut, but it increases prices by the same amount: the prices of imported goods for obvious reasons, but domestic prices also increase if wages increase. Currency devaluation just changes the units, on a free market it shouldn't change either wages or prices in real terms; on a free market, external devaluation (i.e. currency devaluation) and internal devaluation (keeping a strong currency but cutting wages and prices) should be more-or-less equivalent.
The only reason I see countries sometimes prefer to devalue their currency is that nominal wage cuts are extremely unpopular, and in some cases made legally prohibited or disincentivized (by laws that are themselves extremely unpopular to repeal). If in some sectors and regions the real market value of labor decreases, it results in unemployment and reluctance to hire, especially on highly regulated labor markets. Having some general inflation allows aligning people's wages with the market value of their work without the unpopularity of a nominal wage cut; it's essentially a way to dupe people into tolerating a real wage cut.
But inflation in Argentina has steadily been high enough that this isn't a problem anywhere; there has never been a problem of the currency appreciating because of the productivity of farmers, it's always been depreciating rapidly.
If Argentine farmers get less pesos for a dollar when exporting their goods than factories do under a separate exchange rate system, that's effectively just a redistribution program from farmers (especially landowners) to the urban workers, except in a roundabout, inefficient way. Note that this is different from if Greece had its own currency and devalued it: Argentine workers can use the same pesos they get for the export goods they produce to buy food from Argentine farmers, while the different exchange rate applied to farmers reduces the prices farmers can get by exporting (as measured in pesos); while Greeks would have to buy expensive euros (as measured in drachmas) if they wanted to buy goods from Germans.
Also, when it comes to which sectors would "need" a currency devaluation to remain competitive without nominal wage cuts, what matters are the rates of change of productivity in each sectors, not the current productivity: if agriculture is more productive than industry (in what sense? international comparisons?), that doesn't mean industry "benefits" from currency devaluation (the differences in productivity are presumably already priced into the wages and land rents people are used to), only if agricultural productivity is increasing faster than industrial productivity, or especially if the latter is decreasing outright, does.
“Currency devaluation just changes the units, on a free market it shouldn't change either wages or prices in real terms; on a free market, external devaluation (i.e. currency devaluation) and internal devaluation (keeping a strong currency but cutting wages and prices) should be more-or-less equivalent.“
There is no such thing as a free market, anywhere, ever. And when you’re talking currency, you’re handicapping yourself to act like there is.
The reason that it’s generally unwise to pursue significant currency manipulation is that it’s risky. Policies of intentionally devaluing your currency can be pursued but carry the danger of sparking hyperinflation. Some would say even the indirect devaluation of moderate government debt spending is so risky (though you can mitigate this through progressive taxation, since it forces people who might have the means to trade in foreign currencies to pay a premium for your currency at least some of the time).
In the real world, currency manipulation is a high-risk, high reward strategy that has been proven so effective that you have to punish it in international trade agreements lest you be placed at a disadvantage.
Promising to give free money back to people who are presumably annoyed it has been taken away from them is always a good pitch. Look how hard it is to reform anything relating to subsidises in the US, for example.
What you call free money is not necessarily free money. That's your ideological framing. I believe social programs represent people being paid what they are owed
Do all social programs represent people being paid what they are owed? If the government sets up a social program to print money to give everyone in the country $1000 a week with no conditions, are they still being paid what they are owed?
I mean, that's called a UBI. If a country was just a closed economy what that actually would be equivalent to is taxing all sorts of monetary assets (bank accounts, stocks etc) and redistribute the money uniformly to the entire population. It would thus encourage investing money as quickly as possible into capital, since it's not going to be much good on its own. It's by no means some kind of insane proposition, per se; the main problem is that the currency changing value also affects the import-export trade balance because the other currencies don't change necessarily at the same pace.
The point of welfare here is also: people all participate in a social contract, whose purpose is to provide well-being to society as a whole. Thus, shouldn't they all get a share of the windfall, regardless of their specific contributions (which might see them more or less successful), and merely on the basis that they uphold that contract? Similarly, given that those that succeed spectacularly can only do so thanks to the framework of civilization upheld by everyone around them, don't they owe something in exchange?
That's the philosophical and ethical argument. Then we can go into the technical one of how this or that implementation shapes economic incentives and thus what actually happens. But they're two different levels; you could probably make a case that economically speaking killing the elderly would boost the GDP, that does not mean people will think that killing the elderly is OK. Material well-being is *part* of people's objective function but it's not the whole story.
Economic movement is what counts so the removal of any stimulus is risky. The end game tends to be just exposing national assets to foreign acquisition which tends to send the revenue in the wrong direction. So, as undesirable as subsidies may seem they are essentially a protective measure against aggressive acquisition and asset stripping.
Pre and post Soviet Russia gives a classic example this shift of ownership and the political consequences. Yes the assets were handed to apparatchiks but they weren't exactly turned into local economic activities.
“This shit won’t work, and will just make people suffer more” would be my guess. I’m sympathetic to that idea, and this being my first exposure to the guy I am going to assume that if/when he fucks shit up in some new way, libertarians will dutifully explain how his ancap ideas would have worked if only they were done harder.
Libertarians and Communists believe themselves very distinct. But both are very unwilling to admit that when anyone makes a real go of implementing their ideas at scale it turns into a clusterfuck of new suffering. For reasons that can be distinct or remarkably similar.
Unfortunately the inflation metrics above are a good example of the reason it will be very difficult to get anyone to agree what actually went on here. Clearly what was happening before wasn’t working, but libertarians tend to be like communists in another way. They are often able into identify problems but suck ass at prescribing solutions.
Libertarians _do_ have a list of "here's the times someone tried our ideas, and the time our guy was in power is widely regarded as 'the good times' by those who lived through them, until non-libertarians attained power and returned everything to crap."
The United States of America is founded on something that is essentially a libertarian or classical liberal ideal. And that has worked out very well, indeed better than anything else has ever worked.
All of which, even if you want to lay at the door of libertarianism or classical liberalism, are not even blips on the contribution to human welfare that the US system of classical/market liberalism has made. (You could also note that those are norms that were very much standard at the time, and the US got rid of it, at least in part, because of its founding principles)
I mean, slavery was not the *fault* of liberalism, but it's ridiculous to say that a country that literally still had millions of slaves was founded on an ideal of libertarianism. At the very least it had to be founded on some kind of very dirty, very approximate compromise, because slavery is kind of very very much not libertarian.
As others have said, there's always a chance that a good chunk of the overall average welfare of the US is just due to a bunch of factors that have little to nothing to do with politics. Plenty of natural resources, plenty of land, a geographic position that makes them into a fortress, two oceans on the sides, a narrow bottleneck to the south and a friendly country full of ice to the north. And even putting aside slavery, the way the US dealt with the native populations and conquered all that land and all those resources isn't exactly stuff that would pass the NAP test.
I wouldn't call it libertarian, there's still plenty of state intervention. Also it depends on what counts as "working well" for our purposes. Becoming the foremost military and economic power of the world? Sure. But the US have more internal inequality and poverty than other western countries. If your metric is not the sum total of wealth, but having a distribution of quality of life that has both high mean and reasonably short tail in the bad end, then Scandiavian states have the US beat by a wide margin.
Well, I can imagine a lot of things worse than libertarianism, many of which have actually happened; sometimes you're stuck implementing a suboptimal policy (such as dollarization) because if you tried one that's better (managing your own money supply responsibly) you'd fuck it up.
Russia has a war-economy. Structurally, the country is being surgically stripped clean of anything of value for a post-war-economy, which is why everybody is eager to keep this pointless stalemate going for years to come
Russia has a bunch of ideologically aligned countries that are still willing to trade with it. Plus, they get to count artillery as production, but don't have to count spent artillery shells on the negative side of the ledger.
Meanwhile, it looks like exports from Estonia to Russia in 2020 were about $1.5B worth (compared to their biggest trading partner, Finland, at around $2.3B). This dipped by about $0.3B/yr by 2023, which isn't quite 1% of their GDP. Maybe the simple export number isn't capturing the full story of loss of Russian cooperative economic activity.
Wages are up, unemployment is down, but for basically the same reason that happened during the Black Death - because everyone available is being sent to the frontline (~30,000 per month) or, for people with the means and the marketable skills, leaving the country (~900k according to WP). In the medium to long run, Russia's economy is doomed, whether or not they win the war. They are doing their level best to destroy everything of value in Ukraine so they have little to gain there if they win, and they will be the pariah of most of the world in any case. The best they can hope for is to become the mining department of China.
Conclusion is that Russia is more resilient that it seems. From what I understand it’s thanks to their economy being pretty well managed for an otherwise corrupt and mismanaged state.
Russia's GDP is high because of how much they are investing into the war. Unemployment is also very low because there is intense competition for workers who are being directed into the army at an alarming rate. The problem is that it's likely not sustainable. For now, Russia is relying on its sovereign wealth fund, but the enterprises that helped it build that wealth fund are running at a loss for the first time ever. Russia will eventually run out of money to spend and will start having to run a huge deficit to keep up this level of investment in the war. They've already stopped investing as much in the civilian sector and the civilian populace is already suffering as a result.
If they keep losing 300k men per year and those men are mostly the least productive / poorest members of society (such as Wagner's prisoners), it's quite possible that it will end up being sustainable thanks to Russia's economy being mostly based off natural resources.
Russia was running a birth deficit even before the war. That is not sustainable for any economy. And if anything, an extraction-based economy is more reliant on less-skilled labor than an economy that is based on manufacturing and other high-skill jobs.
They’ve got Uzbekistan and Kazakhstan nearby, both with a 3+ fertility rate over the past two decades. They don’t need Russian labor and things get more automated over time.
My guess was that Russian GDP decline was already “priced in,” that sanctions had done all the damage they were going to do and GDP growth would no longer be effective. I looked it up and:
They only have data through 2022, but it looks like Russian GDP peaked just before their invasion of Crimea, steeply declined after that, and then started a rebound which was somewhat affected by the outbreak of the broader war.
1) Sanctions on Russia are very leaky due to a mix of preparing for them, extended period of sanctions leading to new trade routes, and a significantly larger proportion of world GDP held by non-NATO countries who are not participating in said sanctions.
2) Economic stimulus: Russia is both running a deficit and drawing down in very large reserves accumulated in the 2010s. It is also taking huge numbers of economically unproductive young men (prisoners, unemployed men in small villages and from the poorest regions) and effectively giving huge cash infusions to their regions via pay and very large cash bonuses to their families if those men die (which many, many have). It is, in practice, an extremely large cash transfer to poor people and areas.
It's not that. Lithuania also shifted a lot of business from Russia, but is doing very well and growing. The problem is that Estonia has the lowest debt in EU, and continues to resist spending, thus imploding from inside with self caused austerity, when in fact they should borrow, invest and spend. The situation is inverse to that of Argentina, Estonians are “too responsible” for their own fault. There is an economic phenomenon called paradox of thrift, this is what is going on in Estonia. Furthermore, they are inflicting even more pain to themselves by significantly raising taxes (VAT is 22% from 20% and will increase to 24% next year). Also, they are increasing other taxes. This is deflationary and will further sink their economy. It's self harm, someone should help them.
Yes, this is true. Of course, the government inflicting these high taxes on businesses is rather unpopular and will probably be replaced by the opposition soon (which means right-wing populists, whatever that's good for). We are also about to inflict some new "going green" type of economic self harm any time now, more than most European countries, as I understand (the place was lately ranked #1 for Environmental Performance among countries, another example of being highly Responsible).
This won't happen, EUR is a stable and predictable currency used by almost all of Estonia's trade partners, and also gives credibility for foreign investors in the country. EUR was introduced exactly because of it.
No, Estonian economy was not so tightly integrated with Russia's, though some supply lines have been disrupted. The recession is more closely related to the cooling of the markets in Scandinavia. "Sales in foreign markets have been constrained by the fact that the main markets for Estonian exports have performed worse than the European economy as a whole and by the appreciation of the exchange rate against the Nordic countries", as per economy gurus. Locals are wary of the future and save instead of spending; interest rates for loans are huge, energy is expensive. Still, I don't understand how it's so much better in Latvia.
Edit: ok, apparently, pre-war the trade with Russia accounted for 8% of Estonia’s exports, 10% of its imports and 46% of natural gas imports. That's not nothing.
Worth noting that at least in Finnish discussions Estonia (which has quite a bit more of a deregulated economy, lower taxes etc. than here) has been treated for ages kind of like how libertarians internationally are treating Argentina now, ie. prime example of the virtues of market that's going to zoom past us Any Minute Now.
In the UK it's treated as the shining example of digital government, with op-eds along the lines of, "In Estonia, the entire fisheries ministry is now based in the cloud."
i'm not an expert on eastern european economics but i get the impression from flipping through the charts of nearby countries since the 70s and 80s that estonia is leading the pack
we don't exactly have great experimental methodology, and there's tons of confounders obviously, but this doesn't exactly look like an example of failed policy
when i compare gdp growth % per year to, say, the whole european union, it looks pretty impressive
although i'm not sure exactly how much stock to put into that
Yeah, Estonia is the shining star of post-Soviet republics. It's a fundamentally sound country with some temporary economic problems that are mostly over by this year. Being a neighbor of Russia's creates an inherent swinginess.
I assume that it just looks so extreme because of the color coding. Note that ALL countries with 0% to 3% get light green, and ALL countries with -3% to 0% get light red. In data from [1], Estonia is at -0.5%, but Germany at +0.1%, Sweden at +0.2%, Austria at 0.3% could easily have ended in the red zone as well. Estonia is assumed to be bad in 2024, but not "totally outlier bad". They had a very tough year 2023 (second worst in EU after Ireland). I guess the general reasons Estonia was hit hard is the close connections with Russia: it had imported lots of Russian energy, had an economy entangled closely to Russia, has a large Russian minority, and so on. But
Estonia is a great success story. If you look at results at greater time scale, you can clearly see it and also notice that the line is not smooth, it has up and downs all the time. Judging the success or failure at the particular time point is pointless. It could be many reasons why at this time it experiences recession (Russian sanctions, slowdown in Scandinavia) but ultimately it doesn't matter.
Probably the same story is about Argentina. It is meaningless to judge it from such a short time period. If you don't know deeper aspects then these indicators can be misinterpreted. Scott is clueless about these economic aspects. I would trust Noah Smith or someone who knows this stuff much deeper.
For example, nitpicking if Argentina had or didn't have rent controls. Obviously they had. They were different than the rent control in the US. So what? Some may think that it means that Argentina rent controls are not relevant. They are, just in a different way. The fact that availability of rental property has increased, means that abolishing rent controls have a strong effect. It also means greater financial incentives to build more or turn existing space into rental property. It just takes time for owners to react. And of course, the confidence that Milei politics are going to stay is also very important.
Left-leaning commentators will mostly see that poverty has increased. It has but unfortunately it had to happen temporarily. I went through post-Soviet crisis and it was much much worse than Argentina had ever experienced. I am sure that many policies were wrong at that time. Maybe even today we have more poor people than during Soviet times. And yet, the Soviet times were terrible. All people equally poor and miserable, every day waiting in long lines to buy essential items. Today we have all the opportunities that we could never had during Soviet times. We can take care of poor people if needed but don't make that an excuse to stop important economic reforms.
Estonia, if you zoom out, is mostly a straight "line goes up" in post-soviet times. Argentina is much messier and less straightforward (mostly but not entirely in bad ways).
Argentina doesn't have 30 years experience under Milei-type of reforms. Look at the start of those 30 years of post-Soviet Estonia. You could conclude that it was unmitigable disaster.
In fact, even today many powerful people argue that we need to restore the Soviet Union because it was more prosperous.
It sounds like you're Estonian (or at least know more about Estonian economic history than I do), do you have recommendations for anything good to read on post Soviet Estonian economic history?
I am a Latvian but it will be almost the same as Estonian story.
I think Noah Smith has the best review about these economies. In general don't trust natives who are specialist in this field. Most of them will have their own subjective ideas, for example, that their economy is terrible with very little data to back their beliefs.
>He laid off 24,000 government workers (other sources say 70,000).
He announced that he wants to lay off 70,000 workers, but hasn't reached that number yet. Today a lot of government contracts end, so if they don't get renewed (and it has been announced many won't) we could get closer to that.
>(the 195.23% number seems implausibly high to me, but I can’t find any contradictory claims, so I’m nervously letting it stand)
The former rent law was awful and indeed, landlords prefered not renting their properties rather than renting them under that law. So that number does sound believable to me.
Why did so many landlords avoid renting out their property? Isn't the $0 they get from not renting worse than whatever unfair price the rent law forced them to charge?
An occupied unit has higher (and more variable) maintenance costs than one sitting vacant, and a restrictive law might involve nonmonetary costs. If rental revenue divided by hours of compliance paperwork and other managerial hassles is less than the hourly rate you could earn doing some other job, might as well not bother.
I guess one possibility is because inflation is huge and volatile and everything else seems riskier -- at least an empty apartment in Buenos Aires is a reasonable store of value in a country where value tends to go up in smoke.
that's exactly why. investment apartments are used bc of capital controls and wide distrust of banks. they aren't really meant to be rented. my family in SA collectively owns over a dozen empty apartments, bc they can't put their cash anywhere else.
Okay that is wild. Reminds me of some family stories my elder relatives used to tell about the early 1930s when US banks were failing all over the place.
Just wait until you hear about the common practice in some parts of Africa of building houses brick by brick for savings.
Buildings sit under construction for years. When the owner gets some money, they buy some bricks and add them, when they don't have money, it just sits there.
Same in Russia. Corrupt officials store wealth in major city real estate. They usually don't rent it out because they don't really need the meager income stream nor the headache, so it just sits vacant.
Coincidentally: this is one of the sources of crypto's absurd-at-face-value market cap.
Im not Argentinian, but most likely, no. You have to maintain a property that you are renting, so better to not rent it rather than pay for whatever breaks. Plus if you rent it for a loss, you are most likely locking in that loss for a number of years. Better to wait it out and see if you can get something later.
In the late 1980’s in Berkeley, there were boarded up houses that landlords had taken off the market because renting it out was a net negative. I imagine that, with lower interest rates, those converted to homeowner-occupied housing.
Something similar is happening to landlords in New York City. Many storefronts are sitting vacant because if the landlord accepts a lower rent than they're currently asking for, the value of the building on paper will fall, and the bank that loaned the landlord the money to buy the property will demand cash to compensate for the fall in the (paper) value of the loan's collateral. Which leads to the ironic result that the landlord will lose more money by renting the unit than by leaving it empty. :/
Something, something, and thats why we need a land value tax! Not but seriously, its an abject failure of the free market that people are incentivized *not* to rent property at market rate, all because of land speculators artificially restricting supply to keep values high on paper...
The direct reason that Berkeley landlords were not renting was that Berkeley’s rent and vacancy controls prevented them from turning a profit. Believe me when I say that no one was then speculating on residential housing in Berkeley. The left was fully in control of the city, had been for a long time, and still are. What changed was that interest rates dropped to the point that it made sense to convert all of that rental property (which makes sense in a college town) into resident-owned homes (which does not). At no point was the free market the problem in Berkeley.
There was also a component of speculation (this sounds derisive, but I assure you it is not, I was one of the speculators) involved: With an election coming, there was a good chance of changes being made to the laws, it was better to take your chances for a few months that get stuck on an unfavorable 3 year contract.
Another factor is that with 3 year contracts, it could easily be profitable to leave your property empty for one year, gamble that the rent control law will be repealed, and then implement a more favorable contract.
You see a similar, but smaller, effect with interest rate changes in America affecting housing supply.
I'm in Spain, and here we have been going down a similar path for some time now. When you take on renters, they are in for minimum 5 years. You cannot raise rent above the official inflation rate during that time. You are not allowed to ever enter your own house during that time period (5 years!) unless the renter allows you to (they could be destroying it, whatever, doesn't matter, you have no right to go in). There is a massive problem of "okupas" (squatters) here, these enter other people's houses and can stay there for years without the police/judicial system able to dislodge them. No new AirBnB licenses allowed. Soon a law banning short-term rental will be passed (ie. 6-12 month rental for students, digital nomads etc). And all this has done is caused rental prices to soar (the opposite of what they are trying to achieve) because no house owner in their right mind would want to rent out their house under such leonine conditions. The new idea the socialist/communist government here is kicking around is to start fining anyone who owns a house which they are not renting out...
That's interesting. Do you know if the laws are roughly similar in Portugal?
I ask because I was recently at a conference in Porto discussing, among other things, housing policy. The presenter (a sociologist from Lisbon) pointed out that many prime-estate apartments in both Lisbon and Porto were boarded up (which I saw for myself: Lots of prime real estate decaying in the middle of the city, judging from sunken roofs and empty window frames). The presenter blamed it on "capitalism" and "not enough regulation". I was wondering if the problem was not exactly the opposite. But being a foreigner and with very limited knowledge of Portugese housing policy I did not want to criticise my host. Still wondering, though.
The laws are not as bad here in Portugal as in Spain. We can do rental contracts minimum 1 year and for short-term AirBnB-style renting there is some burocracy, but not too terrible. You can visit your rentals in the last 3 months at least. Things used to be worse but our government went bankrupt a few years ago and the IMF forced some reforms. One law that we have that sucks is that if you rent to someone with disabilities or old age (over 65) the lease becomes perpetual. You are punished if you are nice. One bad thing is that rent taxes are quite high (25%) so most people rent in the black market.
The case you mention of the houses falling a part is different. During our freedom revolution (1974), all rental contracts were frozen. I have a family member that has a tenant that pays 4 euros per month. The mother died but the daughter inherited the rental. Some of these tenants don't live in the house any longer, but the rent is so cheap that they keep renting. This has improved a lot as some of the old renters die and Airbnb made it lucrative enough to buy out these old contracts. But there are still many of them still.
Many thanks for your response Ricardo. I can see how that explains the puzzle.
(Scratching my head as I walked through beautiful Porto I half-though the explanation could be drawn-out legal quarrels among multiple heirs to an estate, about who owned it & who should pay for the upkeep. Since so many houses in central Porto are impressively old! But frozen rents since the 1974 revolution explains it.)
Spanish landord here. I own two flats, both rented out.
The "good" one has had its rent increase capped below inflation for three years in a row, first "because of COVID" and then "because of Ukraine", and yes, it doesn't make sense in any case.
The bad one has had its renters become squatters, haven't paid a single € in two years now. The judicial process started more than a year and a half ago, cannot (by law) finish this year (this is a complex issue, but the current government has been extending a "temporary" COVID measure for 4 years in a row, not allowing you to evict your tenant, even if they don't pay, while you still have to pay your mortgage, taxes, maintenance, etc). All in all, I calculate I'll be out of three years of rent (~25k€), and around 18k out-of-pocket costs, plus judicial costs that I won't recover because renters are "vulnerable" and thus have free justice and can declare to be "insolvent" and just not pay.
According to some statistics I currently cannot find, the current probability of a rental unit becoming delinquent in Spain is about 17%, per rental (not per year). But you incur that risk on every tenant. The corresponding insurance for this is about 10% of a year of rental income (not trivial at all), and only covers up to 12 months of rent, while judicial process is north of two years.
Ask me if I'm going to close or sell flats as soon as I can. After 20 years of renting out several flats without incidents. Bad laws, and even worse, bad judicial procedures (themselves governed by another, different set of bad laws) can, and do, kill markets.
> You are not allowed to ever enter your own house during that time period (5 years!) unless the renter allows you to (they could be destroying it, whatever, doesn't matter, you have no right to go in)
I mean, that seems sensible. Except that if they're destroying it and thus damaging your property I'd expect police can be involved and enter with a warrant. But a landlord showing up with a second key and entering the house I'm renting without my consent should not be a thing. The house might be theirs, but the stuff and personal information it now contains are still mine.
Yes, of course, but we are not talking about creepy surprise visits by a landlord with a spare key, we are talking about a situation where the landlord cannot even call up and say, hey, when could I come and have a look at my house to make sure evrything is okay. I think a logical compromise would be to have a mutually agreed-upon visit let's say once per year, but even that is not allowed in Spain. But not sure how this works in other countries to be honest.
As to destoying the place, how would you even know they were doing it if you can never enter and have a look?
Do you know what "supply of rental housing" exactly means? I suspect that it means the number of flats that are currently available for renting. So I assume that it is NOT counting ongoing rental contracts.
If I am right, then those are very low numbers with lots of fluctuation. In normal housing markets, only 2-5% of the flat are available for rental. In tight markets, it's lower, for example <0.1% in Zurich, or 170 units for a population of 400,000. And this number varies a lot. For example, the main months for moving in Switzerland are April and October, and I would assume that the number of available flats in Zurich triples every year before these months because many people move out.
I am not saying that the number for Argentina has a trivial explanation like that, but tripling may not be as spectacular as it sounds.
EDIT: In a comment further down, darwin found out what was measured: "the offer for rent" (according to google translator). I assume that this indeed means the number of flats that are offered for renting.
SECOND EDIT: Thinking about it, this number will also increase if lots of people can't afford their rent anymore and are forced to move out. This seems like the most plausible explanation, and I find it conceivable that it leads to a tripling of this number.
Because the law stipulated a 3 year minimum contract, controlled how much you can raise prices (with our inflation a big deal), forced you to register the contract with our IRS-equivalent (we are big on tax avoidance) and added other restrictive measures. Everyone knew that the next government would get rid of it, so they'd rather wait until that happened than be locked in at unfavorable rates.
Some people explained the details better than I could in other comments. I just want to add that the old law was truly AWFUL, like some sort of reverse-masterpiece. It somehow managed to screw with both landlords and tenants at the same time. It was a given that it would be modified, and probably sooner rather than latter. That's why many landlords speculated with the law being repealed in the short term (correctly, in hindsight), and, for the time being, decided not to rent it under those unfavorable conditions.
But also, do we know that the 195.23% increase is actually in the total number of units rented out or available for rent, or in something like the number of units offered right now (which is more believable and is partly a measure of turnover as well as how long it takes for a unit to get snatched up)? EDIT: in another subthread, darwin found it was actually units offered: https://www.astralcodexten.com/p/preliminary-milei-report-card/comment/70979479
I found https://www.slowboring.com/p/nayib-bukele-el-salvador (sorry, paywalled) really interesting. Yglesias' take is that yes, many people tried "throw criminals in prison" before, many people even tried "be really really tough and try super hard to throw them in prison for a long time before", and it's not really obvious why Bukele succeeded where everyone else failed (it might be because he lulled the gangs into complacency by making a deal with them, then backstabbed them before they could react?) I've never found any other source that even goes into as much detail as Matt and I wouldn't be able to begin to figure out what he did right.
My sister-in-law is a second-generation Salvadorean immigrant, but I always worry that I'll be opening some horrible wound if I ask about politics back home.
That breakdown is fascinating. One of of the most striking points he makes, something I wasn't aware of, is that the Salvadoran gangs were *really freaking poor*:
> *El Salvador’s MS-13 and B-18 are not in the same league [as cartels]. Their bread-and-butter is extorting poor people in an impoverished country. Their expertise is localized brutality rather than transnational business. The narco gangs would annihilate the Salvadoran gangs in any fair fight.*
A seemingly reasonable point from the Banished Realm:
"El Salvador, by contrast, is basically just a city state centered on San Salvador. The country is the size of New Jersey, and the overwhelming majority of the population is within the capital region. If you get kicked out of San Salvador, there is no alternative power center to hide in the shadows of, and the government doesn't have the sort of federational subdivisions that limit jurisdiction and reach in the same way a larger country does. As a result, anti-gang successes in the capital are far more effective for nation-wide effectiveness than in other countries."
I suspect a lot of such claims are just a panicked reaction by left-leaning people who are extremely scared of El Salvador's policies spreading to other countries. I.e. imagine if Mexico repeats his policies perfectly and imprisons 1% of their male population in horrible conditions without trial... and it works? This will immediately have a cascading effect on US policy discussions and thus the whole world. Before you know it every country is racing to imprison the most violent 1% of their men and the idea of "fair trial" just sorta goes out the window.
My own theory is that rounding up every single "scary" looking dude under between the ages of 16 and 40 in (say) Detroit would instantly bring down the violent crime rate by a factor of 10.
I think it's less panic and more a general sense of "It can't possibly be that simple, right? Otherwise everybody would already have done it?"
I think part of the reason is Bukele's crackdown was way more hardcore, thorough and well-planned than previous mano dura crackdowns. Part of the reason is that El Salvador is super small. Part of the reason is that Salvadoran gangs were both more deeply hated and much weaker than the average cartel.
I suspect it *is* that simple, especially thanks to new technology available to the police these days such as being able to run 24/7 surveillance of every public street in the city with facial recognition and using that to track down criminals. But it requires capable execution and suspension of habeas corpus. Usually countries are either capable executors (Norway, Netherlands), enforce habeas corpus (US, Mexico) or have low violent crime levels (China, Japan)
I wouldn't really classify Bukele as "right wing" (and so I wouldn't assume that "left leaning" people will be critical of him). He seems to represent a phenomenon kind of orthogonal to the left-right spectrum. As the linked article notes, his roots are in the postcommunist FMLN, though he broke with them later.
I honestly wonder if it all came down to the terrible decision of Salvadoran gangs to give themselves lots of gang tattoos. The cases I read about of wrongly detained people in El Salvadore are usually reformed gangsters who still have the damn tattoos.
Yes, why do gangs think it is a good idea to have gang tatoos?
I remember when I read "The Hardy Boys among Pirates" in my early youth, where Frank and Joe were able to identify pirate members left, right and center in US cities because they all had the same pirate tattoos. Even then (I was about 12) I though that was a lame plot device in a book: Surely no real gang of gangsters would be so stupid as to make their members identifiable to outsiders by merely looking at them.
But here we are, in the 2020s, observing that life is imitating not even art, but run-of-the-mill young-adult mass-produced fiction.
As far as I know no one else has done the thing of locking people up for having gang tattoos (or other gang identifiers). E.g. bikie gangs in developed countries can ride around proudly wearing their colours and they don't get arrested for it. Yes, it shows the cops who the criminals are but that's no great mystery.
If it was routine for gang tattoos to get you arrested people would stop getting them. The fact that El Salvador went from not arresting tatted up blokes to suddenly arresting them all caught the gangs out.
> Yes, why do gangs think it is a good idea to have gang tatoos?
It locks members in. Having one signals to your peers that you're committed to the gang. The harder to hide (eg on your face), the stronger the signal.
Good point. It is stronger than "ordinary" signalling; it is bordering on self-binding. That is, a particularly strong/costly way to signal credible committment (here: to a gang).
Presumably this also keeps outsiders out. An undercover cop, or a member of a rival gang, isn't going to get head to toe tattoos for your gang. And as Olivier says above, it means you can't switch gangs or abandon gang life easily.
I suppose the gang was gambling that infiltration and defection was more dangerous than systemic persecution. Turned out to be a bad bet.
If the Yakuza game series has taught me anything, the answer is: because it's incredibly cool to reveal them in full by taking off your shirt and remaining bare-backed while readying yourself for one last desperate knuckle fight to settle a score once and for all.
I don't subscribe to Yglesias, but I'm going to go out on a limb and say this is a lot easier when the criminals are covered, head-to-toe, in tattoos which identify them as members of murderous gangs? Doesn't seem like rocket science.
Salvadorean-American here. I regret to inform the world that one of the main reasons why Bukele succeeded is because most of the gang leaders in the country tattooed their faces. And the rank and file gang members heavily tattooed all over their bodies.
Since removing tattoos is expensive, the gangs are screwed for the time being. But I have no doubt that every year, gangs are inducting new members who have been instructed to ease off on the tattoos. Over time, it will become harder and harder to identify gang members.
I don't want to pour cold water on Bukele's success at reducing crime. One can only wonder why previous presidents didn't start rounding up these gang members who were making little effort to hide their identity.
Basically it worked because, unlike in a lot of other places, the people of El Salvador really, really hated the gangs and wanted them to go away. This kind of thing doesn't work if you don't have massive popular support.
Duterte too please! I know he's out of office now but everyone made a big deal about how horrible his war on drugs was and then they shut up about it, which makes me suspect he might have succeeded.
I've always been fond of saying that the war on drugs has not been tried and found wanting, it's been found difficult and left untried. The Philippines tried a real war on drugs, and I'm interested in knowing how it turned out.
> I know he's out of office now but everyone made a big deal about how horrible his war on drugs was and then they shut up about it, which makes me suspect he might have succeeded.
Could just as easily be that it went average-badly and the media/their audience just didn't care enough to follow up. Would be interesting to see hard facts either way.
That's my naive impression. If it went really well I would expect someone to report that, and the left-aligned media to fight that impression. If it went poorly I would just expect the media to report that as well, given how much they reported on his actions previously.
The most likely result is therefore mixed and muddied to the point that there's nothing interesting to say and no clear narrative to push.
I'm in PI right now, and my read on it is that Duterte's war on drugs was used more for executing people that various politicians or police didn't like (because they had free reign to execute anyone, and throw a baggie of drugs on the corpse to justify it), rather than an actually effective tactic for reducing drug use.
12-30k people were estimated to be killed, the overwhelming majority of which were extremely poor, small-scale users, with not a single major prosecution or death of a major drug lord. The Philippines DEA says that drug use and sales weren't really affected.
Still, it was moderately popular in the middle classes, because it didn't really affect them and being "tough on crime" is usually popular, especially in relatively high crime places like Manila.
If in order to succeed a war on drugs needs to be so tough that it gets to the point of killing scores of people it's entirely reasonable to ask what exactly about the goal of not having people using drugs is worth that price.
>First, the 25% number was just one really bad month. Inflation had been at a baseline of about 4% for most of the last five years
That doesn't seem like the most accurate description. The current MoM inflation rate of 4.2% isn't typical of recent years - it's lower than any month since January 2022.
And inflation wasn't holding steady at around 4 before inexplicably jumping to 25. It was generally rising over the last several years, before suddenly reversing its trend.
Looking at annual inflation makes the upwards trend a little clearer:
2020: 42.0%
2021: 48.4%
2022: 94.8%
2023: 211.4%
[Looking further back, inflation has generally been on the rise in Argentina since about 2009, (with some exceptions, like a moderate spike in 2019), making the current drop in inflation that much more notable.]
You also somewhat contradict yourself, by presenting the drop in inflation as a trivial return to norm, while also writing: "I think he gets credit for ... decreasing inflation."
A legitimate complaint about the Millei government is that it did not let its currency float freely. The effect of that is to stretch out a long devaluation. Devaluations have inflationary effects, but it was already built in due to prior money printing. The problem is that devaluation makes debt service harder, so they worked in a slow devaluation.Maybe this is the best that could have happened, but it makes some of the inflation effectively Millei’s fault.
AFAIUI that's a compromise he had to make with other parties. However, devaluation doesn't really make debt service harder when it's really about bringing the official rate closer to the black market rate: for debt denominated in Argentine pesos it makes it easier; while for debt denominated in hard currency it makes it formally makes a given amount of hard currency cost more pesos, but at the same time the government implicitly loses money whenever it converts pesos to hard currency at a "better" rate than the black market (i.e. market-clearing) rate, which gets gradually eliminated.
he brought in Luis Caputo as Minister of Economy, the man who took all the debt during Macri's government and crashed the economy in 2019. He's doing the same he did back in 2015: spending all resources subsidizing US Dollars to keep the peso artificially strong while paying 4% A MONTH in peso denominated rate, an obviously criminal carry trade scheme designed to fleece the country once again.
Let me repeat that, he brought the same people that already failed in 2015 to do the same scheme, again.
This post lacks the most critical issue in Argentina: the current account deficit. As long as our brothers in Argentina can't fix their current account deficit, they'll be forever plagued with deficit and having to resort to the IMF.
A quick Google by me shows that president Milei has turned a current account balanced in both Q1 and Q2. I don't know how long he can do that, or what are the caveats. But I'd spend like 80% of the discussion about Argentina discussing the current account deficit.
No, part 1 was about the national budget. The current account represents the imports, exports and other international transactions. Argentina's problem IS NOT having a national budget deficit (every country does), the problem is the lack of USDs because the current account is highly negative.
The destruction of the industry, education and science that Milei is doing is sentencing the country to continue exporting only primary agricultural products and having a negative balance for decades to come. It's the same that happened from 1976 to the big crisis of 2001, with 25 years of neoliberalism, and the same that Macri did between 2015 and 2019.
What would you consider to be the long term differences between his plan and the former trajectory?
Full disclosure, I see that rate of inflation to be unsustainable and that the previous track was not going to lead to a good result. Whether his plan will result in a good result is a separate question. Do you think the previous trajectory would have resulted in a good result, absent Milei?
What do you mean by previous trajectory? I consider that Argentina is on the trajectory that Macri started in 2015. He did exactly the same as Milei, with a huge devaluation and large austerity measures. They are pretty much the same, right-wing neoliberal clowns with the mission of redistributing wealth as much as possible to the wealthy. He started a process of deindustrialization, also did big cuts in education, science, and health (which were very harmful, just before the pandemic). He took the largest debt ever granted by the FMI, US$56.3 billion, conditioning the country's economic policies to this organization once again. And all of this while making inflation go from 31.4% per year in 2016 to 53.8% when he left office in 2019, and poverty from 31,4% to 35,5% (probably increased more, due to methodological issues).
After him, Alberto Fernandez could not do much, with the pandemic, the pressures of the IMF (and interest payments on the debt), the internal fights within Peronism, the international situation (war in Ukraine, etc.), and one of the biggest droughts that affected foreign currency earnings from exports.
So, you have to see the trajectory before Macri. Argentina had a big crisis in 2001 after 25 years of neoliberalism (with economic policies really similar to Macri's and Milei's ones. In fact, Menem was the president during all the 90s and Milei unveiled a bust of him this year in the Casa Rosada calling him "the best President of the last 40 years at least" lol). It ended up causing 62% of poverty and 20% of unemployment. It was really bad. Argentina still suffers from the inequality and social chaos that resulted from this. In 2003 Néstor Kirchner a center-left peronist took office and the country had a decade of growth, industrialization, repatriation of scientists, redistribution to the lower sectors. Obviously there were some problems, inflation was starting to be worrisome by 2015 and the extreme right won elections.
Milei's false discourse is that Argentina's problem is the fiscal deficit. It is a very convincing discourse, because it's very easy to convince ignorant people that overspending is bad. But Argentina has already had dozens of stabilization and economic shock plans, you can guess that they never worked. Again, you only need to look at what happened with Macri recently. Obviously, having orderly and reasonable public accounts and keeping money printing under control is necessary. But completely cutting public works, destroying domestic consumption, totally slowing down the economy and causing social chaos is not the way to go. I believe that a trajectory more similar to that of Nestor Kirchner would undoubtedly be much better. Argentina needs to improve its international trade balance, generate exports with higher added value and stop selling only soybeans. You cannot do that by destroying industry and education.
What’s your take on Argentina’s political and economic situation? I would love a neutral, non-biased opinion. It would be great if you could back it up with historical knowledge. I’m willing to change my mind.
Ah. At least with a free-floating currency, I'd consider the current account (incoming money minus outflowing money) of the country as just the combination of the current accounts of private individuals and companies/organizations, and the government, as measured in hard currency. The government's "current account" is equivalent to its surplus/deficit, while private entities' "current accounts" are their own business.
Currency control shenanigans complicate this, but AFAIUI Milei is moving the official rate closer to the black market rate (i.e. what the free-floating rate would be).
Milei is moving the official rate closer to the black market rate (i.e. what the free-floating rate would be) <--- He is intervening in the foreign exchange market delapidating the dollars from the international reserves to keep the black market rate low. He knows that the moment the price of the black market dollar goes up, inflation is going to skyrocket again, and is doing everything possible to prevent this. Preferably until next year's legislative elections.
You're exactly right about the current account being the most important thing for Argentina's economy by far. It's crazy that there is no mention at all of this in the post. 2024 is expected to have a record surplus, but sadly that's not for good reasons: it's because there was an unusual drop in imports. The recession and the extreme Milei's devaluation reduced demand for imported goods and impacted foreign trade results by making imports more expensive (and also there were postponements of import payments). The only positive thing is that exports grew by 9.8% compared to the very bad previous year (there was a very big drought which severely decreased exports of agricultural products).
You can't just leave out that there's capital controls that don't allow companies to just pay for imports, they have to be approved and the government just isn't approving anything. In practice, Milei's government is exactly the opposite of what he preaches.
Yeah, that's what I refered to with the "postponements of import payments". Of course he is the opposite of what he preaches. It's surprising seeing comments in this post saying that he is doing what he promised! His more important promises were:
1) Fiscal surplus paid by "la casta" (politicians and people of power). First of all, even if you think that the national budget needed to be reordered (which it probably did!) he really overextended with his cuts and is causing incredible harm to the economy and specially to the most vulnerable sectors. But even then, pretty much all the cut are being made to pensions (it represents like 65% of the cut). Retirees are below the poverty line for the first time. Milei vetoed a law to increase their retirement and in peaceful demonstrations old people were brutally repressed by the police.
So... no, it's not being paid by "la casta" at all. In fact, he had the opportunity to remove special tax benefits to judges (who don't pay the "Ganancias" tax) and to keep the Bienes Personales tax (the only important tax he cut, and is the most progressive one, paid by only the 3% richest), but he obviously didn't. On the contrary, he imposed the Ganancias tax back (it's a pretty harsh income tax) when it was removed by the previous administration! In other words, there isn't a budget cut paid by the rich and powerful, it's just redistribution of wealth from the least to the most wealthy as usual.
2) Dollarize the economy.
He will not do this.
3) Close the Central Bank.
He will not do this.
4) Deregulate the economy, including the exchange rate controls.
He is now literally saying that "economic growth is possible with the exchange rate controls" and that "it's not urgent to remove them".
5) Not negotiate under any circumstances with communist governments.
You can't make this up... he recently literally said on prime television that “China is a very interesting trading partner". He needs their dollars and will do whatever China asks him to.
>Remember, the United States very briefly had 8% yearly inflation after COVID and people were livid
Actually, the USA had yearly inflation of (just over) 9% in June 2022. I also wouldn't call it "very brief;" rounding to the nearest percent, US inflation was at least 8% from Jan 2022 to October 2022.
Bottom graph uses a different time axis. When you rescale, you can see its data closely matches the YoY economic activity of the top graph (it seems to say the opposite because you focused on MoM analysis).
So it's basically the same error/statistical lie you mentioned at the end of part 2.
It concerns me hat after 10 minutes of google, I can neither find the original report that gives the 195% housing supply number, nor any evidence of the actual institute it reportedly comes from.
As far as I can tell, everyone is just repeating one viral Newsweek article that said this:
>the supply of rental housing in Buenos Aires has jumped by 195.23%, according to the Statistical Observatory of the Real Estate Market of the Real Estate College (CI).
But I can't find an institution that is called The Real Estate College (CI), I can't find the original source saying that, and I can't find any description of how they are measuring 'the supply of rental housing'.
Of course I don't speak the language and have no context so I might be missing something that's very obvious and apparent to people who do. But ussually when I see a stat repeated endlessly like this, I'm able to eventually track down the original source and evaluate it.
As it stands, I'm pretty skeptical of this until I know who is reporting this, and what operational definition and methods they are using. The naive interpretation is that developers tripled the number of residential buildings in the country in a matter of months, in the middle of a recession, which seems obviously absurd. I'm sure it instead is measuring some other thing that makes more sense, but I have no idea what that thing is!
(I'm a little worried it's also an artifact of that one month of hyper-inflation, like landlords briefly stopped advertising vacancies when there was sudden 25% monthly inflation and everyone was panicking, then put them back when that stopped, and the supply now is the same as it was 6 months ago but 3x what it was during that one month)
Can anyone find the original source on this number?
Here's the website of the Observatorio Estadístico del Colegio Unico de Corredores Inmobiliarios de la Ciudad Autónoma de Buenos Aires (that's a mouthful):
So it looks like it is measuring the number of... listings? Offerings? Contracts? Google translate says 'THE OFFER FOR RENT INCREASED BY 195.23%.', still not 100% sure how that is measured, this report doesn't give any methodology that I could find by copypasting to a translator (but let me know if I missed it!).
So not measuring an increase in the housing supply necessarily, which is the big thing everyone cares about. More listings is definitely good, but I feel like there's a difference between 'there is more housing for people to live in' vs 'more housing is being advertised'. For example, I *think* a lot of people all swapping apartments with each other would cause this, without any more people in homes?
But, anyway... this figure is compared to 12-29-2023. Not only is this the end of the fiscal year and whatever other seasonal effects, it's also in the middle of that gigantic 25% spike in inflation. The figure of 40% rental price drops also seems to be compared to that period of gigantic inflation.
So I don't especially doubt that things are better than they were on 12/29/2023, but... how do they compare to one year previously, when inflation was at a similar rate and it was the same season?
I'm sort of cynically assuming that this report would have given that number as the natural comparison, unless this number was better for an argument they're trying to make. Of course he also came into power around this time, so 'Before and after he came into power' or 'before and after the worst of the crisis' are both meaningful reasons they might use this measure too.
But right now I can't tell if this is a specific benefit of housing policy and better than it was last year at this time, or just a return to baseline after a crisis/the holidays/etc.
"More housing is being advertised" is the same thing as "more housing for people to live in." Obviously swapping apartments would be absurd and is not happening.
If there are 100,000 apartments, and 80,000 of them are currently being lived in, 5,000 are currently advertised, and 15,000 currently kept vacant, then listing 10,000 more of the currently kept vacant ones results in a 200% increase of listings, but at most a 12.5% increase in actual housing for people to live in.
Obviously, people switching houses is much less absurd than an actual tripling of housing.
I get the feeling that the disagreement is from differences in philosophy, possibly a left vs right difference. People who criticize regulations (eg, rent control) on landlords often do so because they induce would-be landlords to either not rent their properties or to stop doing so, thereby reducing the housing supply. If a politician does away with such regulations, more rental housing is available because more people opt into becoming or staying a landlord, which is reflected in more housing being advertised. So I can see why he's saying that they're the same thing.
It's not only vacant apartments. At least where I live, people often do renovations to divide their house to rent out a part of it, and regulations that seek to put the thumb on the scale in favour of renters because of inequities or power imbalances or whatever leftie buzzwords mean fewer people bother, resulting in less housing.
I mean, the housing supply going up, not the available housing supply going up. IE, more housing being built.
A few other commenters have mentioned that the number of listing changes a lot seasonally, so if it's just that and not actually more housing to house more people, that seems relevant but a lot less impressive.
THANK YOU FOR THIS. Yes, as usual there is no fact checking in Argentine media. The data supposedly comes from rental sites own reporting, like www.zonaprop.com.ar with no checking whatsoever. They actually do this all the time, quoting private companies' numbers without ever checking.
I just wanted to comment that "Real Estate College" seems like the punchline to a Dad joke of some kind.
I know, I know, different languages/countries have similar names that may not capture the nature of the institutions (cf "public vs private school" in UK vs US), but it's still funny to me.
Ummm, good point? I mean, that was the reason I searched for it in Manifold, where I found nothing, and proceeded to assume what I’d seen here must have been somewhere else. Ah well, nevertheless.
"So a devious liar could say that “inflation” (meaning yearly inflation, which is admittedly the standard measurement) is “unprecedentedly bad” during Milei’s administration."
I think that it's misleading to argue that Milei's administration is uniquely bad on the issue of inflation.
That being said, there's an aspect to inflation that I think people can lose sight of when discussing it in a political context.
What we're talking about with Milei here is, specifically, *rate* of inflation. And there is certainly value in lowering *the rate* of inflation.
But we shouldn't lose sight of how this doesn't necessarily change a certain core "on the ground" reality. Lowering the rate of inflation is not the same as lowering prices. In fact, prices often continue to grow even as the rate of inflation is lowered. And I think for most people, when they complain about inflation, what's really drawing their concern is not the current value of the currency *per se* but rather the impact that inflation has on the price of goods and services, particularly essentials like food and clothes and gas and utilities.
I have some relatives that were a bit annoyed at hearing the media talk about how great we're doing on inflation in recent months. Why were they annoyed? Because the prices of food and gas haven't lowered, in many cases they haven't even stablized. For middle class and lower class people, *this* is what concerns them most when it comes to inflation. I explained to my relatives that the media was likely talking about the rate of inflation, but as was pointed out to me, that doesn't change the negative impact of recent inflation that's already been baked into the cake as well as the price of the cake.
So the people saying that inflation is "unprecedently bad" under the Milel government... they might be intentionally misleading people, yes. But they also might be just average Joes or Janes that look at the prices of goods and services and noticing that they're worse than ever and *this* is what they mentally associate with "inflation".
What do you mean by "inflation"? It seems to be something different than what I perceive to be the standard definition, 'the rate of change of prices'.
That is of course the standard definition. What happens is that the rate at which prices increase has indeed gone down, but prices keep going up and wages are stagnant, so of course people have reasons to be unhappy. (I guess the rate at which they keep getting unhappier should go down?)
Inflation is never perfectly uniform across all prices. Usually some are stagnant, and a few are even decreasing, even as many others go up. Some wages likely are stagnant, even as other wages are keeping up with the prices of goods or even briefly getting ahead.
That's exactly how inflation works. I challenge you to show me any inflationary period without substantial wage growth. Stagnant wages are not compatible with substantial inflation.
There's also the thing that "the rate" economics usually look at is the yearly rate, but maybe laymen look at some other time period or something rather different. Like personally, I tend to have the prices I learned in my childhood and early adulthood in the back of my mind when I go shopping, rather than last year's prices.
This is the definition I was going with - "a general increase in prices and fall in the purchasing value of money." So I didn't think that the term "rate of" was included in the definition of "inflation" itself. If I was wrong here, my apologies.
I think if we want to get a number from that definition, we have to answer the question "compared to what?". If we answer with "one year earlier", we get the standard measure of inflation as reported on the news or whatever, the rate of change per year.
It would be valid to say that prices are unprecedentedly high under Milei—but prices are unprecedentedly high pretty much all the time everywhere (and in Argentina noticeably so all the time), so that's not particularly noteworthy. Deflation is rare and intentionally avoided by monetary planners.
The 195% growth in rental properties sounds pretty plausible if read as "195% growth in listings of properties for rent vs last year". Probably it is listings for rent, not total being rented. In my experience even in locations not going through macroeconomic shock reform to have like order of 30% cyclical increase in listings, say, over the holiday period it will be much lower, and around the start of the school year in college towns it can be much higher.
Yeah, it seems extremely plausible to me that you could get a big jump in the number of properties being listed for rent just by repealing some bad policy that made renting unviable for most property owners. Besides anything else, if you have an unusually low number to start with it doesn't take a big increase in absolute terms to generate some eye-popping percentage figures.
Thanks for your data-based, genuinely open-minded inquiry.
Your post confirms I have entered a right wing bubble, as I had not seen any dismissals of Milei. Bubbles are not good. I wish social media would not tailor what I see; I want a more random experience. Suggestions, readers? I deliberately follow independent thinkers with other views, yet still, I am being steered.
I dropped my WaPo, NYT and finally WSJ subscriptions last year in disgust at what is intentionally omitted. Even mildly rewarding that with $1/week grates in the craw.
Fox, an unexpectedly balanced source though odious in tone, seems to have also been taken over by pod people. My news is now from X, a few supported Substacks and the tawdry yet legitimate NYPost.
Well, I wish Milei and the people of Argentina success. We have good friends who run a respected science institute in Chile, one Chilean and one originally Swiss. They gave me a positive view of Pinochet, who was described in my college days as a person who cut off the hands of a beloved leftist guitarist. Our friends say refugees from Venezuela have been a problem. It is up and down in Chile.
What I appreciate about anecdotal observations is that, even if fairly dismissed as not representative, they are direct, hence a glimmer of truth.
Read Jared diamond's book Upheaval for the chapter about Pinochet. He did a lot worse than that to the guitarist. And untold thousands of other people. That chapter of the book is literally nauseating and Diamond doesn't even go into full detail. Whatever good things they told you about Pinochet can't possibly outweigh his atrocities.
Agreed. One peculiarity of Chile is the existence of well-educated, well-dressed people who are far to the *right* of the population, to the point of being apologists for the Pinochet regime. This can disconcert foreigners. It may be much less common now than 20 or 30 years ago. I am not asking for ideological uniformity from academia - it's more that people from abroad who suddenly question their views of the Pinochet regime because they meet well-spoken fascism in a suit are used to a fair measure of ideological uniformity, or at least to a total absence of the far right in their own circle of acquaintances.
Or maybe they have the moral clarity to know that no amount of apologia can justify Pinochet. I have zero connection to chile and knew nothing about its history until I read that book so I had no preconceived notions. If even a quarter of what Diamond wrote is true there is no possible way to justify it. The economy may have been bad, Communism may have been bad, etc. But there was no reason for what he did other than pure sadism.
The former dictator of South Korea, Park Chung Hee, was one of the most highly rated South Korean presidents as of 2021 and is incredibly popular *especially* among those who lived during his reign. It's the young, those who do not have firsthand experience with life before/during/after him, who dislike him most. It seems to me that democracy and human rights are luxury beliefs, not ones that indicate moral superiority. Similarly, that you have zero connection to Chile isn't a sign that your judgment is more enlightened; it just means you've had zero skin in the game, much like younger lefties who have the "correct" views on such historical figures.
I live in Chile. A friend's housekeeper had her sister "disappeared" by the Pinochet regime, as her sister was a housekeeper to someone in the Allende government. This woman speaks very highly of Pinochet with a "the atrocities are bad, but look at how much the country improved."
I'm not necessarily agreeing with her, but if someone whose family members were killed by Pinochet can praise him, I don't think we can say the good things "can't possibly outweigh his atrocities."
Your friend's housekeeper is insane and I would be insulted if a family member spoke this way after my disappearance (presuming I was still alive or otherwise conscious).
This lack of loyalty is especially mind-boggling in a Latin American context. I suspect your friend's housekeeper hated her sister or something.
Due to the relationship, it was hard to pry too much about exactly why she believed what she believed. But I think my most generous interpretation is: "previously, our family was so poor that family members died very frequently, and now the country is richer, they don't. It was awful to disappear people, but I am also grateful that my nieces and nephews reliably survive childhood"
I wonder if this isn't a natural defense mechanism for grieving people. Liberia famously had a politician who ran on a campaign slogan that was something like, "He ate my pa, he ate my ma, but I'm voting for him."
Maybe when you lose a family member like that, it makes it easier to think that your family member was killed for the greater good. Maybe that gives meaning to a death that would otherwise seem senseless. This might be why the Apache tribe, after being pacified/conquered by the United States government, quickly became extremely patriotic. In the early eighties, Independence Day was a massive celebration on the Apache reservation. I don't know how much that holds true today
> Xi Jinping is well aware of this. Xi was himself a target of the revolution. His sister died in it; he, his parents, and his other siblings were exiled, imprisoned, or tortured because of it. Through war and will, Xi’s father had climbed the Communist hierarchy. He knew the grand and bloody heights of Zhongnanhai. He brought his family to perch there with him. Though young, Xi would have personally known many of the country’s most prominent Communist leaders when the tumult began. He would have attended school with their children. He would have watched as these ‘heroes’ were killed off by zealous Red Guards. He would have seen them thrown from their heights one by one until he was thrown down himself.
> How does Chairman Xi make sense of these things? I often ponder this question. Xi Jinping is a man who watched the Communist Party cannibalize itself. He watched this up close. He suffered tremendous grief and pain because of it. And yet from the age of 17 forward he devoted his life to it. He has done more than defend Party: he has personally moved to punish historians and researchers who chronicle its past—a past he lived through. Those historians who research the atrocities of the Mao years are accused of “engaging in historical nihilism.”
you have a strange definition of insane- reactions like this are pretty common all over the world.
Lots of people who were sent to labor camps by Stalin (and in some cases under pending death sentences) and then were released in the mid 1950s after he died still loved him after they came out.
and then there's the famous case of that Iraqi guy who cheered in 2003 when Saddam Hussein was overthrown, because "he executed 20 of my relatives", and then a few years later after the beauties of the US occupation had made themselves apparent, said "i wish we had Saddam back".
I talked to an Iranian woman once whose sister had disappeared into prison and never come out again. She was sad about it, but shrugged: “she was political.”
It really struck me how fatalistic she was about it, as if her sister had gone hiking in bear country and been eaten by a bear. What can you do? She was political.
I'm sure he made the trains run on time. No but seriously, how did this comment thread turn into apologia for evil dictators? Am I still on the same blog or did I somehow get redirected to an alternate website?
Anyways, Pinochet wasn't even that good for the economy and he embezzled a ton. He undid the incredibly stupid economic policies of his predecessor so yes that helped the economy, but he could have done that without torturing anyone. Yes, some dictatorships are more ambiguous, but I didn't think this was a particularly difficult case to judge. Are you trying to argue that it's impossible to commit inexcusable atrocities as long as there is economic growth under the regime?
What are your views on Deng Xiaopeng? I think he's one of the greatest men to ever have lived. You can also bet your ass he/his regime committed plenty of atrocities. Could he have done the greatness without the atrocities? How the hell do you know?
News suggestion: I read El País and find it reasonable, YMMV. There is a US edition (that I don't read), but you might give it a go: https://english.elpais.com/
As for Pinochet: I would recommend reading The Pinochet File, a book based on declassified US government records. It is illuminating, and it might also be a good choice for "Dictator Book Club", though I'm not sure Scott wants to read more complaints complaining about who he calls a dictator. :)
El País is basically in the pocket of the Spanish socialist (and currently governing) party (PSOE) and will publish no bad word against them. Has a pretty clear left-wing skew
Yes, the request Alice K. made was for suggestions on other views to break out of a right-wing bubble, so I recommended a news source with a left-wing skew. If I've misinterpreted the request, apologies to Alice.
Oh, I thought she wanted neutral sources. I believe there is no shortage of left-wing skew around and they are easy enough to find, no? (NYT, Washington Post, the Atlantic, LA Times, NPR, etc etc)
I really feel recommendations of books on the Pinochet years should come with something like a trigger warning valid even for people who do not believe in trigger warnings and are sick of trigger warnings. There are torturers in the world, but those folks in Chile weren't normal.
Much the same went on in Argentina - in fact the two regimes shared techniques, prisoners and so forth. Argentina may be talked about less because it's a more black-and-gray story, where the gray side (to the extent that it was gray) consisted in young idiots who went around with semiautomatic weapons even before any glimmer of democracy disappeared. (Also, Argentinian politics are particularly illegible due to the third axis - there's economics, there's authoritarianism, and there's Peronism.)
The Argentinian regime killed more people, in part because Argentina is a bigger country (well, at least in one out of three dimensions). However, 10x is very unlikely to be correct; you would get this if you divide two numbers obtained by two very different methodologies - one is a guesstimate given at the time (independently by two sources: human-rights advocates who were really just trying to guess something plausible but impressive, and people inside the dictatorship who were claiming credit for how many "enemies" they had killed) and the other one is a figure of people with first and last names whose corpses were found and identified, rounded down (if you were definitely kidnapped by the regime and thrown in the sea, you count legally as 'disappeared').
The estimates for Argentina are in the 9000-30000 range. I heard Chile had about 400k exiles, but have no idea of how many people were actually killed.
oh that might well be true. I vaguely remember seeing numbers of 30k for Argentina and 3k for Chile bandied about, but you might be right that one is a high estimate and the other a low one.
I met an older Argentine guy in Buenos Aires who truly hated and despised the current regime c. 2013. Stupid, lazy, indulgent of criminals, corrupt, etc. But when I asked him what he would say about a return of the military, he shuddered. Inconceivable. Anything would be better than that.
> I have entered a right wing bubble ... I want a more random experience. Suggestions, readers?
Maybe read less, watch YouTube more? My YouTube recommendations are full of conspiracy theories and Russian propaganda. Not sure how exactly YouTube decided that this is what I need to watch, but maybe their targeting is not more detailed beyond "this guy sometimes watches videos about politics" and then they just show the most popular videos in that category.
The problem is there is nothing there about Argentine, or basically anything much beyond "top 10 reasons why NATO made Russia attack Ukraine".
when im on youtube, i often see ads for Ground News, which is some sort of news aggregator that highlights bias. Or something like that. Idk much about it. caveat emptor.
I have heard that when Fox News actually presents news, it's not terrible. Their commentators, on the other hand, usually are terrible, and a lot of the airtime on the Fox News channel is commentary and not news.
I believe it is too kind to characterize people who would use 12 month inflation in that way as devious liars. I believe many people are so ideology brained, biased and careless that they are perfectly careful of repeating - and even creating - such a statistic without thinking carefully enough about it to even know if they are telling the truth
In terms of disincentivizing certain behaviors my belief is that being told you actually don't even know if you are saying a true thing is more uncomfortable than being called a liar, and harder to easily dismiss
I'm flabbergasted that you think it's being "kind" to call someone a liar instead of calling someone ignorant. Are you a STEM person? I would ABSOLUTELY rather be ignorant than a liar. Ignorant people can and do educate themselves. The path to reform is long and steep for a liar, especially if their lies are always profitable in the short term, and they are able to lie to themselves about whether they need to be reformed at all.
In the moment it would make me more mad to be called a liar, but it's very common in the online context. Overall I will probably just discount them and disagree harder
Imagine someone says to you, "I'm mad online and going to call you a liar". Now someone says, "I'm not particularly distressed by any moral reflection relating to the accuracy of your claim because it's so wrong it calls into question your ability to know whether you're saying true things at all"
That, I'm going to remember, and respond to. Recently nuclear critic @AukeHoekstra said on X:
"This is typical in my feed: nuclear proponents boasting nuclear is cheaper, without sources, and based on spurious outdated and overly optimistic assumptions.
Please up your game."
This got a big reaction. In fact the 'non-source' of the nuclear proponent was a new DOE report referencing a fairly recent study, and his source was just some guy on twitter saying it was outdated. It was hard to even notice that because he had persuasively framed it as hopeless incompetence
I think you value competence more highly than most people, so you would prefer to be called a (competent) liar than an incompetent truth-seeker. (EDIT: Yep, in your next comment you express admiration of someone cleverly making a wrong argument you disagree with.)
Most people don't care about truth-seeking at all, so "liar" is basically a synonym for "outgroup" (because they automatically accuse of lying everyone they disagree with), and outgroup is the worst thing that a person could be.
I definitely would never admire the trait of successful self-deception. To be clear if I believed someone was accurately calling me dishonest I would absolutely take it harder than incompetent
What I do think is that they are being honest as far as they are aware. I've seen their comments several times and they appear capable and relatively thoughtful
You'd have to be nuts to intentionally lie to the effect that people you disagree with aren't sourcing their claims when, if anyone actually observes the sources referred to, it turns out your source is a random, snarky, opinion vs the DOE
In this, and many, cases rhetorical competence can easily hurt your genuine competence. If you're good enough you can lie to yourself without having a clue. You repeat the lie in convincing ways because you believe it. Step two is an honest step because your initial mistake was in not exercising the difficult competence to actually consider if what you are saying is actually supported
As a result a person like this is being honest by popular standards - and they will not find it persuasive to be called a liar. They may find it rather devastating if someone reveals to them how clear of a mistake they've made and, imo, correctly attribute it to incompetence
I personally would prefer dealing with a honest person who made a honest mistake than deal with a clever liar that is intentionally deceiving me... but still, I get what you're saying here, and there's some truth to it.
People who use stats/tables badly aren't necessarily doing so in a clever deceiver way, many simply have extremely motivated reasoning and literally only see what they want to see in a stat without thinking more deeply about it.
(Not Argentinian, just a Latin American academic with lots of Argentinian colleagues - last talked to them one week ago)
- One thing to understand about Milei is that he is not just your oh-let's-shock-them-and-end-this-inflationary-period-once-and-for-all-even-if-that-is-a-brutish-remedy-do-you-know-a-better-one? polician. He is very ideological to the point of cultishness - his libertarianism is that of a homegrown clique, and would barely be recognizable as libertarian if seen closely by US libertarians. For instance, it's very anti-abortion.
- The already bad situation in academia has got materially worse under him, but, to my surprise, there is still room for it to get worse (let's hope it won't). (Very concretely: even senior academics get 0 (zero) travel money, so, if you invite an Argentinian, you have to cover every cent - but, on the other hand, there are still positions being opened here and there, and they often stay open, as people are leaving and the remaining candidates often aren't up to the usual standard; Argentinians are now telling strong young Colombians, Peruvians, etc. who self-identify as long-term optimists to please apply.) What has changed majorly under Milei is that he has attacked academics directly and virulently, as a supposedly privileged 'caste', and that that has made a clear difference to how academics are treated: they tell me they've gone from being seen as respected professionals who are having a hard time to being ill-treated while standing in line at the market, or things of the sort.
- The vicepresident managed to get herself known by saying outrageous things that went against the consensus. Some of the things she says are at least half-true (guerillas didn't start with the dictatorship in 1976; sure, some started during the previous dictatorship, before 1973 or during the unstable, illiberal democracy from 1973 to 76 - and certainly didn't make things better). She was also head of a pen-pal club for dictators that killed well over ten thousand people, and had systematic torture policies that will make you lose your appetite for a good long while if you look them up. She presented herself as being a family member of a victim of terrorism. Turns out her dad, uncle and grandpa were military men, linked to crimes against humanity. (She claims there were unsuccessful attempts against her grandpa's life; apparently that's enough to make her into a stigmatized victim, in her own words.) How does that make someone popular? These days, it's enough to get talked about, and to oppose anything that is perceived as a new orthodoxy.
I'd say abortion is more-or-less orthogonal to libertarianism: if you think a fetus is a human in the morally relevant sense, you probably oppose it whether you're a libertarian or not, otherwise you probably don't oppose it whether you're a libertarian or not.
>She was also head of a pen-pal club for dictators that killed well over ten thousand people
Is killing 10000 people the membership criterion of that club (as I first interpreted that sentence), or is it just a club whose members happen to have killed 10000 people?
Generally agree with this. There's nothing inconsistent with advocating a pretty minimal role for the State -- just enforcing laws against violence -- and also seeing abortion as violence.
I'm not accusing him of inconsistency - as he puts it, libertarianism implies respect for another person's life projects, and apparently a blastocyst has life projects. (Or maybe that starts with gastrulation?) It's probably fair to say, nevertheless, that US libertarians default to pro-choice, whereas Argentinian libertarians default to anti-abortion (I don't know whether they have that as part of the definition).
I think you might have an overly rosy view of US libertarians if you mostly read eg GMU bloggers - there are a lot who can only be described as "ideological to the point of cultishness", and many are also pro-life (for example Ron Paul, the most successful libertarian presidential candidate in recent history).
Ron Paul and the paleo-libertarians brought in a right wing element that was very different from the Randian types who founded the party and spread the term "libertarian" to mean a kind of radical classical liberal. But ideological to the point of cultishness not only describes libertarianism in general, it is, so to speak, the point.
Liberty magazine once ran a survey in which it asked readers some question like this: If you fell off a building and then grabbed a pole that let you hang outside the building, suspended in the air, and then the only way you could survive was by kicking in the window of the apartment and entering it in violation of the owner's property rights, would you die or would you kick in the window? Over half the respondents preferred death.
>Is killing 10000 people the membership criterion of that club (as I first interpreted that >sentence), or is it just a club whose members happen to have killed 10000 people?
Academia right now IS a socialism promoting caste system that does deserve to be starved of funding, so it sounds like he's doing the world a favour by showing the path, honestly
Is Milei also planning to defund the roads, water works, electrical grid, and hospitals? Or does he perhaps recognize a broader concept of "public good" than a hardcore libertarian would?
And if so, perhaps "education" should also be on that list of public goods, as it is on the list of most governments worldwide?
Most education outside STEM is not really a public good although it is enjoyable for those who love it. Historically it was justified by paying low salaries and forcing the profs to educate the young in the basics. On that basis, it seems a legitimate public good. When it becomes Leninist training camp, it is the reverse.
He's a twitter shitposter first and foremost, his views are whatever contrarian opinion gets him attention in a niche he sees available: being anti-abortion was good engagement bait and went against the biggest rallying point for the left in Argentina around 2020. Israel-Palestine issues getting the spotlight? Let's convert to judaism! He's obviously in the spectrum too.
Just to add context on this: "Villaruel has an interesting background: she’s a conservative Catholic activist and amateur historian who writes books arguing that past Argentine right-wing governments have committed fewer atrocities (and past Argentine left-wing governments more atrocities) than generally believed, which has earned her accusations of “denialism”. I don’t understand how this led to her being vice president, or why she’s so popular".
Villarruel, daughter of a genocidal military officer, defends the 1976-1983 dictatorship who literally committed genocide (there were no atrocities by left-wing governments). The dictatorship was right-wing and neoliberal. It killed tens of thousands of civilians with a systematic plan of torture and disappearances. It's the Argentine equivalent of the Holocaust. Villarruel argues that the civilians they killed were "terrorists". This was completely disproved by the historical trials that were made to the military juntas.
She came to power because together with Milei they represent the most rancid of the genocidal extreme right. Driven by the lack of education and the constant narrative of the mass media, people believe that voting for the extreme right is a change.
I doubt that even she claims that there were atrocities by left-wing governments, as there were no left-wing governments (at least not in the 70s, or the 60s or the 80s).
Peron in his second coming was no leftist; he was a wily politician who played right Peronists against left Peronists for... actually, it's hard to tell for what sort of long-term gain, since he died soon after taking office.
Peron isn't nor ever has been classified as left wing by "almost everyone", and certainly not by himself. He did have left wing supporters, as well as broadly right wing supporters- the fact that you had Left Peronists and Right Peronists is itself an indication that where he stood on the left vs. right spectrum is a little unclear.
it's been a while, but when I studied that era back in college the instructor was pretty clear that you could plausibly call him a centrist, or you could plausibly call him a kind of anti-traditionalist man of the right, but you couldn't really call him a man of the left (and when he came back to power, briefly, in the 1970s, it was clear that in the last analysis he would side with the right).
Something important to keep in mind when discussing current inflation -> the Argentinian Peso is still pegged to the dollar with a crawling peg of 2% a month.
When Milei devalued at the beginning of his term, he set the price at 800ars to 1usd, and it rises 2% a month, so we are currently at 1000ars to 1usd.
That likely accounts for half of current inflation (so 4% monthly inflation, 2% "real" and 2% just due to the crawling peg).
The plan is supposedly to let the peso float freely once a few vaguely defined milestones are reached (getting rid of the super-high interest treasury debt ,accumulating dollar reserves, etc).
Your math only makes sense if Argentines only ever bought things for dollars
If a mere 10% of purchases were in dollars then the crawling peg would account for 0.2% of inflation. I don't know the actual number
Two more simplifying but false assumptions: there is no black market for dollars and Argentines always get paid in pesos
EDIT: I forgot to mention that that 4% inflation figure doesn't even account for goods purchased for dollars in the first place. It's just the exchange rate between pesos and stuff
I'm used to the phrase 'poverty rate' being defined in a sufficiently disingenuous and politically-opportunistic way that I don't expect much information to come from changes in it. Is it defined better in Argentine measurements? Or is it possible to get more grounded figures? Maybe 'how many people are missing meals due to inadequate money' or 'how many people are homeless'?
I think the best source to follow Argentina's macro and microeconomics is UFM Reform Watch (https://milei.ufm.edu/es/). It has the best following of most important indicators and many others such as cement usage, railway freight or credit loans to the private sector.
I invested a small amount in Argentina immediately after Milei's election, and am adding here. Why?
1) The July upturn is the first time economic activity (the EMEA from indec.gob.ar) has increased month / month since at least 2017. This suggests Argentina's recession is ending. Manifold seems to agree with me, as this market flipped right when July's EMEA was released:
Argentine mid-terms are a year away, so if the economy is already recovering we could have an entire year of growth before then.
2) Inflation has been sticky, but about 1.5% of it has been food and restaurants. Agriculture and agricultural investment have seen big upswings, so hopefully that abates.
3) Another big contributor is power and utilities. The Peronists were absurdly subsidizing electricity. Electrical costs are now (or soon will be) set by a formula applied monthly, which should scale with inflation. So if other inflation comes down, energy inflation will too.
1) July economic activity showed significant improvements (+1.7%), which would indicate that the recession floor has been reached. But the advance data for August and September show that it will decline in the coming months (-0.4% for August), which shows that there is not yet a steady recovery, and that it will take months to recover what has been lost since Milei took office.
2) Inflation remains high mainly due to non-tradables, such as services. And it will remain high, since services increase in price when salaries increase in price, and salaries still have to recover a lot of purchasing power lost since the brutal devaluation of December decided by Milei.
Agriculture had a big upsing because of the historic drought from last years.
3) Practically every country in the world subsidizes energy, transport, etc., it's not a “Peronist” thing.
1) What advanced data are you referring to? Thanks!
2) Agreed, December looks like it was brutal. 25.5% inflation with only 8.9% wage growth. Real wages are thankfully recovering at a decent clip. It's worth noting that their peak through 2023 seems to have been July of that year.
Agreed the drought hurt 2023, but Agriculture was also harmed by past economic policies:
1) There are private stimations like the one from the consulting firm Alphacast, you can check it out here https://youtu.be/e4tGGaEr4GQ?t=1102
2) Agriculture is the only thing that generates dollars, that's why it has always had withholding taxes and policies of that kind. Milei is not removing them either, on the contrary, the current and artificially held extremely low price of the dollar is harming exports severely.
3) Ah I wasn't aware their neighbors were doing the same. In Florida I pay 12c / kWh, and we almost have more natural gas than we know what to do with. U.S. electricity subsidies are mostly focused on solar, and my guess is the industry is on net taxed.
In any case, electricity subsidies are bad policy.
Argentina has ADSes listed on U.S. exchanges. I Mostly bought CAAP and GPRK, with some BMA, SUPV, and GGAL.
CAAP I bought because airports are a fantastic business, and its cheap.
GPRK because it's absurdly cheap, and absent some shock I think oil will be range-bound for quite a while.
My reason for buying the financials was bank intermediation is low in Argentina, so getting inflation under control could boost their business. They also tend to own a lot of government bonds, which go up in value as inflation drops.
I don't think I could find any Argentine government bonds tradable through IBKR at the time.
This is from an interview with legendary investor Stanley Druckenmiller in May, quite funny: „I wasn’t at Davos, but I saw [Milei‘s] speech in Davos and it was about 1:00 in the afternoon in my office. I dialed up Perplexity and I said, give me the five most liquid ADRs in Argentina.“ „It gave me enough of a description that I follow the old Soros rule, invest and then investigate. I bought all of them. We did some work on them. I increased my positions and so far, it’s been great. But we’ll see. […]“
"He may have cut (or at least not increased, which given inflation levels is an effective cut) funding for universities, which now complain they have no electricity and are giving classes in the dark."
There's a solution for Argentinian universities' funding problems: impose a time limit as a requirement for graduation. If studying a five-year degree, you have to graduate in seven (or better yet, six) years at the most. That way the number of concurrent students decreases while the number of graduates stays (approximately) the same. Currently, Argentine students have no incentive to finish their degree quickly (no tuition, no time limit, no cultural pressure to leave parental home).
- I assume part of the reason why Argentines who want to continue on an academic career path are discouraged to do so is low salaries. Lowering expenses (and assuming same budget) means Argentinian universities could pay higher salaries.
- If having very little money for conducting research is also part of the reason you talk about destruction of the scientific system, then again lowering expenses means Argentinian universities (or grant giving foundations) will have more funds to grant.
- Most Argentine students want a degree in order to get a job, not an academic career. Assuming a large part of the value of a degree is signaling, shorter careers (not curriculum) would strengthen the signaling value of their degree.
Ok, wait a second. If you want to improve the graduation rate, imposing time limits for graduation is crazy. It will obviously just make people have to quite just before graduating. It's true that Argentina has a graduation rate below other countries in the region such as Brazil and Chile, but this is mainly due to:
1) A lot of university careers in Argentina last between 5 and 6 years, while in other countries they last usually closer to 4 years.
2) The University of Buenos Aires, which concentrates most of the academic offerings of higher education in the country, is the #1 in Latin America. Its level of demand and the length of its courses make it more difficult to graduate, but maintain a high standard pf excellence.
3) Another factor is that in Argentina there are fewer students who are dedicated exclusively to their studies, and there are many who have to work to sustain their studies.
4) University entrance systems in Argentina are totally different from those of other countries in the region. In Argentina there is unrestricted admission and it plays a very important social role. Not graduating does not mean that a person loses their knowledge and that their studies were useless, perhaps a low-income person who was able to access the university and had to drop out can make use of that knowledge in their future work or share it with their community.
What you have to do is to create more universities with shorter degrees, varying the offer and the requirements, and to improve the economic conditions of the population and provide greater assistance so that people can study without having to work. Notice that it's completely the opposite of what you propose.
I didn't mention anything about the graduation rate.
I do agree that Argentina's low graduation rate seems like a problem, but I don't see any relation to the austerity measures taken by Milei's government (if there is a relation I'm interested in hearing what it is).
PS: I do agree on your comment about shorter degrees. I think they are probably a good idea.
You do mention decreasing the number of students while keeping the graduates the same, and a lack of incentives to finish their degrees. I will just share the article I shared with another person below (it's in Spanish, but you can translate it if needed), you can guess if this will have a relation with future low graduation: https://www.revistaanfibia.com/universidades-desmantelamiento-en-cuotas-o-sea-digamos-diego-iglesias/
A low graduation rate is normal (indeed inevitable, humanity being what it is) in an elite institution with essentially open admissions; that happens not just at University of Buenos Aires but (say) at EPFL and ETHZ, or at Sorbonne/Pierre et Marie Curie (well, back when it had open admissions). However, what is more or less standard elsewhere is for half the class to fail or give up after a year or two, not to hang around forever (something that was common in Europe a very long time ago, but surely no longer).
Btw, there is not a "funding problem" for universities. There is a political decision to destroy education and science. Milei is not having any "budget problems" with the armed forces or the police, which form his repressive system. They are having steady salary increases, well above the rest of the sectors. There is also no problem with reducing the personal property tax, which is only paid by the richest 3% of the population. Etc.
Uh, why? Perhaps I misunderstood your point, but this just sounds to me like common sense, in any country. The number of nerds is small. Most people want a diploma to improve their situation on the job market, as a zero-sum game.
If you made it illegal for employers to ask about educational status, most people's opinion on university education would be between "so what's the point?" and "it allows me to spend a few more years without having to get a job". Even the few people who genuinely care about knowledge might start wondering whether it is possible to get the same knowledge more efficiently.
My point was that academic jobs are jobs. It was your dichotomy of jobs versus academic careers that I found distasteful. I have my own critiques of universities, but if you show up to a workplace everyday and get a paycheck every couple of weeks, that qualifies as a job in my book.
In this context I think "job" is the set of all jobs minus academic jobs. I'm not actually sure there is a better way to state this succinctly in English than as was done. The sentence as a whole provided the context necessary to differentiate the two subsets being compared. If we had a previously established word for "jobs other than academic careers" that would fit nicely here, but such a word does not exist as far as I know.
How many scientific careers can Argentina support? My wife is from Chile and lot if her University classmate had to leave Chile to find Jobs that actually required their talents.
Don't take it literally. The person to whom I replied clearly follows Milei right-wing narrative that Education and Science are an useless expense. It's ironic that they are giving a mortal wound to higher education and the scientific system, and then say that the solution is to just cut more the budget for the universities setting some random time limits to students.
Clearly my opinion is different. I think that there has to be much a solid budget to universities and a scientific system of excellence so that graduates can work in the country.
Right now university professors in Argentina have literally the worse wages in Latin America. 90% of them with ten years of experience are below the poverty line. Really? The solution is to put time limits to students? Lol...
Public services can be very useful but rarely are. Especially in economies where they have expanded well beyond the scope of what needs to be public, like Argentina. And yes, funding of higher education and 'science' that doesn't produce much beyond post modern critiques of capitalism most definitely fits into stuff that is not useful.
A more serious proposal would be to set up a self-funded system of student loans, where you get taxed x% of your income for N years once you get a job. This *could* work for university graduates who are more likely to work for large companies with a contract, not under the table.
A slightly less serious, more fun and free-market proposal would be a system where people can buy/sell shares of your future income.
Section 3: The second chart is the same data as the red line (year-over-year) in the first chart, but in bar chart form. It's exactly the same the thing that you were talking about in the previous section.
In a sense, yes. There's a huge stock of local currency debt that's getting rolled over, while interest rates have been decreasing rapidly, they're still at ~40% annual.
There's also the fact that a lot of the drivers for lowering inflation, like allowing more imports, are complicated due to current conditions.
What you’re looking at are official inflation numbers, which are upheld by things like currency controls. In bringing the official exchange rate of Argentine pesos close to the real (black market) rate, there will necessarily be inflation, or even stricter austerity measures than are already implemented. This problem is due to the previous administration artificially keeping the Peso highly valued against the dollar in official exchanges, where the real value devalued dramatically.
Once and if the Peso is allowed to free float against the dollar, then the inflation numbers we see will be a representation of Milei’s policies. Dollarization would bring the Argentine inflation rate in line with the US rate and would also make it harder for subsequent administrations to recklessly overspend.
I'm not going to pretend to know exactly what's happening but I expect a lot of it is due to inflation expectations. If everyone expects everyone else to raise their prices so they do too it becomes a self-fulfilling prophecy.
It's one of the problems with inflation - once it sets in it's hard to get rid of. Brazil managed to do it by replacing their currency.
Inflation looks backwards. The biggest part of the inflation rate right now comes from non-transable services. Let's say, a hair cut. The price of these services is highly correlated with wages, and wages and purchasing power are down after Milei's devastating devaluation in december. Slowly, wages have to recover, but when unions demand an increase in their salaries, they are not asking for the current 4% of inflation, they're asking for all the accumulated inflation that eated their purchasing power the previous months too. This creates inertia into wages increasing more than current inflation, then prices from non-transables going up because of this, and these price increases generates more inflation. It will take several months to stabalize.
Hey Scott, is there a way we can translate this view in Spanish? I like the way you objectively break this down in simple terms, and I would like to share with my South American Brethren.
I spent February 2022 in Argentina, and I plan on spending this upcoming December in Argentina again. I will hopefully have a more clear view on the changes that Milei has done in one year of government.
I think as long as you give credit and link back to the source, people will usually not mind you re posting something that is already publicly available for free
Fair assessment. One primary thing I don't see a lot of people giving Milei credit for is that he's doing the more moral thing a politician can do, which is protect more freedoms (economic, mostly) and provide a relatively-honest picture of what he's trying to accomplish and why. He's the only leader speaking publicly against socialism/collectivism AND acting upon it to his best abilities.
America and Americans should be supporting him morally and hope he succeeds!
Certainly! If he fails, detractors will say “capitalism” failed, when in fact, Argentina will likely remain a very socialist country even after Milei is term-limited and leaves with even some success.
Newsweek mangled the translation when they called it "Statistical Observatory of the Real Estate Market of the Real Estate College (CI)" so I remember it being a right pain to track down.
>You can debate how many sources are actually trying to con you this way vs. just including the yearly inflation number for “context” or something
It does look like the 195% housing supply increase and ~40% rent decrease are both measured relative to that one month of hyperinflation, as well.
I don't know what those numbers would be if you compared them to 1 year ago during 'normal' inflation, I haven't been able to find the data. But it does make me suspicious that similar statistical obfuscation is happening.
In what sense is the "40% rent decrease" relative to that previous month? Did rents actually decrease by 40% compared to what they were in that month, or is it something like a 40% decrease in the rate of increase?
I'm just copying stuff from it into google translate, but it seems light on methodology. I don't know if there's a more complete report available, I don't speak the language.
If Milei succeeds, then is it really a victory for libertarianism, or just a victory for middle-of-the-road centrism?
Most of the policies he's put into place look less like instituting a libertarian government and more like unwinding some idiotic left-inspired cruft that any centrist economist will happily tell you was a bad idea in the first place.
There can be no true freedom without law and order, only a shallow facsimile of freedom. We need to massively overhaul our police departments to introduce better training and tactics. De-escalation should be emphasized. Police should be trained to remain stoic and impassive in the face of irritating or verbally abusive citizens.
The police must be demilitarized, and to achieve that you probably want to de-emphasize hiring veterans. But at the same time, we have an absolutely glaring shortage of police officers in key counties. Overall, we have half as many police per capita as your average European country, and that's absurd. No wonder we have such a crime problem.
Note that local Republicans and cops are keen on just about every measure to fight crime except for significantly increasing staffing levels. Cops cherish their overtime pay too much to want to see that, and the Republican politicians who cater them never push the issue, since they are childishly obsessed with budget cutting.
Had wrote a long response but I hit delete, we simply fundamentally disagree on the meat here though I will agree (mostly) with your first sentence and last paragraph. On the veteran thing though it's not so much a veteran problem but the sort of veterans they hire, i.e. they need to quit hiring military rejects such as prior junior enlisted, former S/MP's, and anyone that had a direct combatant job. I simply don't believe there is any evidence that shows hiring the forty-five year old former colonel of regimental chow hall lends itself to police abuse against the public. It's not a veteran problem, it's a hiring trained (and actual) killers suffering from PTSD who washed out the military as they couldn't handle it nor get promoted problem. When you hire trash, you get trash.
The only quip I'll make is you are confusing "police" with "law and order" and likewise making the mistake law or order depend on each other. People tend to forget those are two separate concepts. Law and order both long predated the police as we understand them today and the police neither provide law nor order anywhere. I've spent a big portion of my life living in places where effectively the police didn't exist and law and order was maintained just fine via other apparatuses. The free'est I have ever lived in my adult life was two years in war torn Bosnia during the 90's, that was freedom and liberty. I had more freedom in war torn Iraq back in 2005 than I do in America and always dreaded when I got stuck visiting "home"; I never got a speeding ticket in Iraq nor a jaywalking ticket in FYROM and the Iranian who used to sell me quasi legal vodka in Doha didn't ask for an ID to check my age. Likewise believe it or not, in Djibouti when I lived there for a couple years I could still use a disposable straw and a plastic shopping bag. I was even able to drink at the bar past 2 am and on Sundays to boot!! THE HORROR THE HORROR!!! Where was an American cop to jump out the bushes and fine me, maybe beat me up and arrest me?? Damn if only Djibouti was as free as 'Merica!
That said, I'll concede if we remove all arrest and investigatory powers from the police beyond immediate third party safety with detention limited to no longer than necessary to alleviate that immediate safety concern, then we can both agree on a police department that should get funded.
A good day for gangland syndicates then... Certainly a recruitment opportunity for all the mafia bosses, oh wait, they already employ enough police as is..
AFAIUI there are plenty of areas, though, where any economist will tell you some policy is a bad idea, yet on the broader non-expert political spectrum it's considered a radical libertarian idea to unwind it in most countries. That's not to say all economists are libertarians, but that they are on certain questions.
The fact that Milei actually reduced the size of national government and fired tens of thousands of government workers makes him a radical libertarian compared to basically any western politician.
Show me a centrist economist who will publicly suggest disbanding the "Ministry of Women, Gender, and Diversity" or whatever the closest local equivalent is. I get that outside the US there's less support for that sort of thing, but I think active opposition at the abolish-the-department level is not a centrist position anywhere this side of e.g, Hungary. Really, show me any economist who would advocate that many government agencies be wholly disbanded, who is not broadly denounced as "right-wing",
Yeah, the stuff about rent control and fuel-price subsidies is pretty standard centrist economics, though "...even though people are really suffering right now and this will make things worse in the near term" is not really a centrist position. But there's also a lot that Milei has done, that I don't think anyone outside the libertarian and/or far-right wings would advocate actually doing. And if he's doing things that any centrist or libertarian would try to do, plus things that only a libertarian would do, then it seems pretty likely that he's a libertarian.
If he's not doing *everything* a doctrinaire Libertarian is supposed to do, then it's pretty likely that he's a libertarian who wants to win elections and actually get stuff done in the real world.
Recession is defined as a decrease in (real?) GDP. Also, recession refers to a rate of change, while the poverty rate refers to a current state, so that already means neither directly implies anything about the other on its own.
I'm aware of how a recession is defined in economics literature. But there is a difference between meeting some technical requirement and what that actually means for people on the ground. Which is why I asked how *meaningful* such a designation is, and especially a phrase like "plunge into a recession." Plunge is clearly not a technical term with a specific definition. If your economy is already a mess, how much worse can it be?
As an Argentine living in Buenos Aires, the 195.23% jump in rental supply sounds accurate. The previous law was severely disadvantaging landlords. At one point, I was paying just $70 USD a month for a 430 sq. ft. one-bedroom apartment in one of the city’s nicest neighborhoods, right next to a park and a subway entrance—while similar apartments were being listed for $400 USD. Landlords, understandably, didn’t want to risk being locked into a three-year contract, so many simply left their properties vacant.
The expectation that Milei would repeal the law likely contributed to the hesitation. No landlord wanted to list a property right before a more favorable law was expected to pass.
Opposite conclusions worry me less than opposite facts.
For example "the inflation is lower but the unemployment is higher, and that is a bad thing" and "the unemployment is higher but the inflation is lower, and that is a good thing" coming from two different sources are kinda okay, but "the inflation is lower" and "the inflation is higher" coming from two sources describing exactly the same data is disconcerting.
Milei's approval ratings look to be following a trend similar to that of Reagan in his first year in office.
Reagan took over with high ratings (because, I presume, he wasn't Jimmy Carter) and then as the screws got put on inflation (via Paul Volker) and the economy suffered Reagan got less popular.
If the Argentine economy picks up and inflation actually falls well below 4%/month I expect that Milei's approval ratings will trend up as well. If not ... then I don't know what Argentina will do.
"...but everyone is united in hating the opposition."
If the Opposition was essentially pushing the country into hyperinflation through obvious abuse of printing money, and this only came to a stop because they lost the election, then I can definitely understand why the majority of the country dislikes them.
> The poverty rate soared from 42% before Milei to 53% now. It’s hard to tell how much of this is the bad policies of the last government coming to roost vs. Milei’s own fault. But Milei firing all those government workers, slashing subsidies, ending welfare programs, devaluing the peso, etc, have certainly contributed.
Slashing subsidies and ending welfare programs (which are just another form of subsidy) is an unequivocal societal good. Experience consistently bears out what theory suggests: subsidizing something unaffordable makes it even more expensive. Always.
> There are strong economic arguments to believe that abolishing rent control should lower prices in the long run. In the short run it seems like it could go either way. In this case, although there are some stories of people whose apartments got more expensive, the official statistics say prices have dropped by 27%.
It's entirely possible for both to be true: rent increased in some places, but overall, the average prices have come down significantly. In fact, it's a statistical near-certainty that *some* prices would go up even if the overall trend is down. Outliers are a fact of life and always have been.
Deontological libertarian I'd say. Believe property rights exist in an absolute form prior to the state, and hence the state has no power to rearrange them for the common good.
The fundamental question is what is the "right" thing to do. In order for an elderly or disabled person to receive money, someone else must provide it. If it is in the form of taxes, one can generalize that it is a small part of the taxes everyone pays.
Conservatives and liberals disagree on what is "right" for this. Conservatives say it's unfair for someone to receive an unearned benefit not freely given. Liberals say everyone deserves at least a minimum standard of living, regardless of circumstances. Both points of view have merit, and reconciling them is difficult, perhaps impossibly hard.
If you are an elderly or disabled person, you should judge the situation on its own merits, not whether you would personally be better off, but whether you think elderly or disabled people IN GENERAL should be supported by the rest of society.
It was not that long ago that this was a burden that was borne primarily by the individual in question's family, and by their church. Shifting it to be on the backs of the people in general has made things worse in a lot of ways, not only for society but *also for the individuals being cared for.*
Source: I have a family member who's a caretaker, and the stories they tell... wow.
> subsidizing something unaffordable makes it even more expensive
Only for demand-side subsidies (e.g. US tuition, healthcare). Supply-side subsidies do seem pretty effective at making the product cheaper (e.g. US corn, soybeans). Though I wouldn't exactly call corns and soybeans unaffordable, and maybe that's what you were getting at.
One comment regarding inflation: The reason a lot of people are "feeling" it more now than before is because, in Argentina, everyone "indexes" prices to US dollar amounts. The "weird" thing about this current period is that there was a lot of inflation while the real(ish) currency exchange stayed, on aggregate, flat (went from 1300 to 1000, then back to 1300 now it's around 1200).
So a lot of people are looking at USD denominated inflation, and seeing that it's been very high during Milei's term. There's a lot of reasons for that (rolling back of ridiculous levels of subsidies and price controls, high taxes on imports, etc.), but to even more sophisticated people it is a very striking effect.
Reading through this post in all its detail, it's difficult to reach the conclusion "Milei is failing" unless one has a strong prior that the thing he is attempting to do is bad. It seems clear that, in terms of his own goals, he is succeeding.
I think the first section is a pretty clear indicator that the way to reduce government deficits is to cut spending. Every time someone in the US proposes a tax cut there's inconsolable wailing about how this will explode the deficit. As if the government ever limits its spending on the basis of how much money it can rob from its citizens. No politicians in the US actually care about reducing the deficit, because if they did they would implement policies like Milei. I don't know if there will ever be the political will to cut departments and fire federal employees here in the US, but at least there is a convincing precedent that it works now.
Technically you are correct, of course reducing spending cuts the deficit. The question is, does it lead to economic recovery and growth ? For example, do all these universities really need electricity to do their work, or is sitting in the dark already good enough ? As Scott says, in Argentina's case it might be too early to say one way or the other.
Er... yes ? Otherwise they'd either pack up and leave, or find some other ways of keeping themselves fed -- ways which would be less conducive to everyone's general well-being.
> No politicians in the US actually care about reducing the deficit, because if they did they would implement policies like Mile
"President Clinton oversaw a healthy economy during his tenure. The U.S. had strong economic growth (around 4% annually) and record job creation (22.7 million). He raised taxes on higher income taxpayers early in his first term and cut defense spending and welfare, which contributed to a rise in revenue and decline in spending relative to the size of the economy. These factors helped bring the United States federal budget into surplus from fiscal years 1998 to 2001, the only surplus years since 1969. Debt held by the public, a primary measure of the national debt, fell relative to GDP throughout his two terms, from 47.8% in 1993 to 31.4% in 2001.[1]"
I'm not sure what your argument here is since you just quoted something out of context at me. But if you're saying it's a good thing when the presidency and Congress are controlled by different parties so they can't waste as much of our money, I already agree,
In an economy with strong growth, raising taxes on a small subset of people, as Clinton did, will have very little impact on tax collection. It will be swamped by generally buoyant tax collections. Cutting spending though, will have enormous impact, because it goes against the trend on government spending
President Clinton cut spending? Or he relented after negotiations and signed bills that Congress passed reducing spending growth well below what he requested they spend?
If it was only up to Clinton, lower spending would've never happened.
I don't think you can take that precedent very far at all. The US government does not spend its money in the same way as Argentina. Our spending is predominantly on Social Security, Medicare, Medicaid, and the military. You can take an axe to the Depts. of State, Education, Energy, etc. and it would barely budge the deficit.
(To be clear, there is plenty of wasteful federal spending and it should be curtailed for its own sake.)
The closest thing Milei did that could translate to us is a cut in the government pension program. And that's pretty signfiicant - but it's something he could probably only do because inflation was a beast that impacted everyone. You're not going to get US seniors to be OK with a 30% cut in benefits for the sake of a deficit that will likely never impact them.
Any serious program of deficit reduction in the US would have to involve (a) cuts to government medical spending (b) drastically scaling back our military or (c) tax increases. Any politician who is not talking about one or more of those is, exactly as you say, not serious about cutting the deficit.
This is much more of an is analysis than an ought analysis. I'm very aware that the biggest hurdle to fiscal responsibility in the US is government healthcare and retirement funds, and it would be political suicide to cut them. That doesn't change the fact that said programs are giant Ponzi schemes destined to bankrupt us.
If the U.S. kept all transfer programs intact (Social Security, Medicare, Medicaid) and maintained military spending at its current levels, and it then cut everything else (discretionary spending like Education, Energy, etc.) by 70%, and if the U.S. had no debt to service, the U.S. would actually have a surplus of approximately $620 billion instead of a deficit.
Oh, also, a point about the "rent control" law. The fact that landlords would sometimes make bank (well, nominally, at least--who knows if they could actually collect rent in those cases) isn't much of a solace. Building housing is capital-intensive and already somewhat risky (land values can change, it takes a long time to get your investment back, etc). The possibility of having your new apartments' rent locked in a too-low interest rate for several years probably has a very strong chilling effect on increasing supply.
Universities are all giving lectures in the dark and have been for almost 50 years......they just don't understand that the darkness of their minds is the source of most of societies current ills.
I'm hoping that Milei's shock therapy will bring only 3 to 4 years of economic pain, followed by a rebound similar to the experiences of Poland or the Czech Republic in the 1990s, rather than the decade-long failure of Argentina's prior shock therapy under Carlos Menem in the 90s.
Argentina’s own history under Menem in the 1990s serves as a cautionary tale. While his reforms initially curbed hyperinflation, long-term structural weaknesses, mismanagement, and over-reliance on a currency anchor led to stagnation and a debt default in 2001. There are the risks that can come with poorly executed shock therapy.
The 195% increase should be units currently on offer. The notion that it could represent the entire rental supply seems deranged: I've seen some old estimates that around 20% of Argentina rents; the idea that an amount of housing equivalent to 40% of all housing came onto the market in a few years beggars belief.
> honestly, people need to understand that inflation is just a number. It's better to have medicine and education than this shit. He's literally killing people.
(closing the browser tab)
That reminded me of a certain Workers' Association of Slovakia politician in 1990s who deflected economical arguments by saying "we can't eat your graphs". Those were fun times; also high inflation, but maaaaaybe that's just a coincidence.
If education makes you think that numbers describing your situation don't matter, you should consider the possibility that your education sucks.
i'm not a fan of capitalism in general, but Czechia and Slovakia actually seem to have handled the transition to capitalism about as well as it could be done, and seem like admirably well functioning countries today.
their gini indices were among the lowest in the world under communism and are among the lowest in the world under capitalism too, for example.
Thank you for your kind words. From inside, it feels like we are always on the brink of a disaster, and yet somehow we always survive to see the next day.
Speaking for Slovakia, the transition to capitalism started by a populist government practically donating all the formerly state-owned companies to its party members, who ruined most of those companies, and then sold the remains on a free market to foreign investors. (The original plan was that the government would sell the formerly state-owned companies and somehow use the money to rebuild the economy. Instead the money ended up in private pockets of people whose only qualification was the party membership and who were obviously economically incompetent.)
Then the official strategy became "let's invite as many automobile producers as possible, by giving them tax breaks, and even lots of free money". Not sure how much sense that made economically (yes, we have lots of car companies, but what's the point if they don't pay taxes), and it felt horribly like putting all our eggs in one basket (if for some reason the cars stop selling, or if the car companies get a better offer from someone else and leave, we are all completely screwed), but somehow the previous huge unemployment was reduced to single digits. Then we somehow joined EU and NATO, during a brief time window when we *didn't* have a populist pro-Russian government.
Education is completely falling apart; all ambitious students go study in Czech Republic, and many of them stay there afterwards. Generally, young people are leaving the country in masses; about half of my former classmates no longer live here. As a software developer, I am economically quite okay (though as I understand it, in a different country I would probably be rich, rather than merely "quite okay"), but I have no idea how the average people can manage it. The current government practically made crime legal by setting the statute of limitations for many crimes (mostly economical ones, but also e.g. rape) to 4 years, which means that if they succeed to survive their election period (and I see no reason why not) all their previous crimes (and there are quite many of them) will be forgiven. Most people in this country seem to be okay with that.
And... you seem to suggest that compared to others, we are doing exceptionally well. That sounds like bad news for the world in general.
I am not sure how much the Gini coefficient is a good news, rather than an indicator that the kind of people who can get lots of money here are afterwards unable to keep it -- because they got the money thanks to their political connections rather than their economical skills, so it's easy come easy go. (Rather than because of taxes, which many of them probably don't pay at all, and never will, given the new statute of limitations.) But I may be wrong.
Can you talk about the "Poverty Rate" a bit more? In some cases it's not a great measure because it can depend on the currency value and/or the price of imports (which might not be that relevant to poor people).
It's % of pop earning less than enough to buy a specific basket of goods. Currency value/price of imports is very important for poor people, as their consumption basket (and the consumption basked used in the measure of poverty) are more weighted towards tradables than the general pop consumption basket. Even if you are not consuming imports (and in many places food is an import), if currency falls it's more advantageous to export goods, so local prices rises.
I don't understand why you say that he deregulated housing. It seems that the new rule is still the government forcing landlords to use a very specific pricing scheme?
Ah, the existential risk people were so close to getting it right: we'll actually be doomed by a pesoclip maximizer...
As much as it's confounded to update on foreign policy changes (uh...political changes in other countries, not policy changes regarding other countries), it's neat to see a really huge housing deregulation go off mostly as predicted. One wishes we could achieve that kind of abundance-grade velocity here, at least in the worst-impacted markets. 27% lower rents and 195.23% more housing in SF would be completely bonkers. (And hopefully not also tied to impoverishing the place...not that there isn't a lot of cruft to cut, but improving affordability by making places suck misses the point.)
before the overthrow of Qaddafi and Maduro's becoming president of Venezuela, both in the 2010s, they might have had the record for the biggest economic collapse in peacetime of any modern country?
Not really- China had about 4.5% annual growth under Mao (between 1952 when this series starts and I think 1976 when he died). Slower than one would like, but still positive. There were a few years with Maduro- or Yeltsin-level economic contraction (notably 1961, which i think was during the Great Leap Forward, with a 26% decline) but that wasn't typical for the period.
The north of England (which suffered immensely from deindustrialization and the loss of manufacturing) is already about on par with places like Slovakia and Czechia if you correct for cost of living.
The "singularity" graph should have a log scale on the vertical axis in order to make the point that inflation has gotten worse recently. A naive reading of the graph suggests that, but of course any graph of constant-rate exponential growth will look like that. I version of that graph with a log scale on the vertical axis would let one determine whether the relative growth rate of the money supply is higher or lower recently than it has been in the past.
One thing I suspect about the pre milei spike in inflation is that it was caused by milei himself. His promises of dolarization made the peso devaluate. It was more a sudden shift in the price level than inflation per se.
BTW a lot of the poverty rises could be just this inflation spike, and it should go away as the less flexible labor prices catch up to the more flexible product prices.
I'm kind of disappointed in how long he's taking to sort out Argentina foreign exchange market and lifting capital controls. Argentina still has lots of different official exchange rates, and it's not completely floating. It's certainly not the shock treatment i was expecting, but on the other hand, there's still a lot of gains to come if he follows through.
I moved to Argentina from Russia recently, and there is one thing that got bad under Milei that is important to me.
The price of medication has soared. I'm taking some psychiatric meds, and it was supposed to be a part of my budget that I don't give much thought about. Instead it's eating more than half of my post-rent supply, and I have to beg parents for financial assistance.
At least hormonal therapy is provided for free, Milei didn't cut that particular part of social programs yet. But the doctors I'm getting it from give me expired medication and apologize that under Milei the supply chain is experiencing issues and they just can't fill the demand.
My friends, who had been living here for longer than I am, report that after Milei took office their landlords keep increasing their rents on a whim, and I am about to have my rent upped by about a quarter at the start of the year.
As far as supply of housing goes, that 195.23% number is less ridiculous than it seems. My friend runs a small construction company in Mar del Plata suburubs, and they are printing houses at Starcraft worker speeds
If you don't mind revealing it to a stranger, what psych medication and how much does it cost? I'm curious how this compares to US prices and the gray market.
If only he was a libertarian. Free market capitalist and libertarian aren't synonyms. He's did absolutely nothing to promote or increase liberty in Argentina that didn't involve enriching his backers and you can't get much more NAP than recently reasserting Argentina's claim on the Falklands.
Claiming something that someone else owns, especially when the community all acknowledges that ownership as legitimate, is aggressive especially when to assert that claim you will have to use violence.
It kind of seems like Latin America cycles between liberal capitalist governments that make money but concentrate it and leave lots of people poor, and socialist governments that distribute more equally but generate much less wealth and leave lots of people poor. Presumably you could theoretically time the switchoff to optimize wealth for the whole country in some utilitarian sense, though I doubt it would match actual realistic electoral politics.
I suspect they can't get out of the 'middle-income trap' because they can't make anything better than Japan or Europe or cheaper than Southeast Asia, and will remain like this indefinitely (or until something knocks down Europe, North America, and East Asia). Fundamentally, life is unfair and bad and some people having nice things means other people don't.
"some people having nice things means other people don't"
This isn't necessarily true, unless you're talking about some specific thing, like THE Mona Lisa. Everything people need and want is obtained through work, whether yours or someone else's, though not everyone's work has the same value (one day of work isn't fungible, but some KINDS are).
I'm pro-market and libterarianish, so I more or less agree with the goals of shock therapy. But I don't understand why it has to be quite so shocking. It seems like you could soften the blow and still accomplish the same thing by waiting a year or so for budget cuts and new laws to come into effect. The laws would already have been passed, but it would give those government workers and people who depend on subsidies time to find alternatives.
Why isn't this the approach? Are politicians worried that during that intervening year they'll lose political support and their reforms will be repealed before ever actually going into effect?
Yes, a more gradualist approach was tried in 2015, but the debt ballooned in order to finance the deficits of keeping things mostly running the same without cranking the money printer, and the social blowback was quite similar. They basically lost the mandate before being able to make substantial reform.
This time around, the debt was much higher (and debt service much more imminent) with net-reserves basically negative, access to capital markets very restricted, inflation much higher and the currency exchange rate pegged unsustainably low.
So while I'm not happy with the fact that people are suffering due to the shock therapy, I'm certainly glad they decided to go that route.
"Are politicians worried that during that intervening year they'll lose political support and their reforms will be repealed before ever actually going into effect?"
Maybe not in those exact terms,but it's more or less this, yes. Suppose for example that instead of just shuttering the Ministry of Useless Gender Horseshit, you went out and said "In exactly one year, I'm closing the Ministry of Gender Parasites, so all of you start working on getting new jobs during the winding-down period!". Now, you've given these ticks on the body politic advance warning to stage a fightback, and there's going to be a strong political lobby of them or such a ministry would never have been established to begin with.
Moreover, in the nature of things, virtually all the people working at a ministry like this will be committed ideologues; also, their degrees will be worthless for any real productive labor, or potentially worse than worthless. They'll be motivated to keep their existing jobs way beyond the baseline expected from the mere hassle and insecurity of a job search. The risk of ending up with a ministry that's just decimated and with watered down powers is extreme, and then your opponents will just proceed to bloat it up even bigger next time they get into power, scream-weeping about "chuds" the whole way to the bank.
Better in every way just to axe them immediately, tell them all to get out of the building within two hours, their jobs no longer exist, their access cards are revoked, fuck off. A fait accompli is much harder to fight back against, including in three or seven or whatever years when the ministry is long gone and nothing bad happened to society: how do you defend the reestablishment and maintenance of a horde of DEI creatures when everyone has lived experience for years of their nonexistence not harming anything?
Hans Hermann Hoppe commented on Milei's record a few days ago, bc Milei explicitly mentioned Hoppe and especially Rothbard (Hoppe's mentor) as his main inspirations.
Of course as an anarcho capitalist Hoppe has different metrics than Scott.
It's not my fault you're so literal minded you take every accusation of official shenanigans entirely literally. I've run into this on ACX a number of times. Accusations of institutional dishonesty should be read with an appended, "or even if the no one is being intentionally dishonest, the incentive structures that affect them are creating outcomes that are beneficial for the perpetuation of the institution." Or in other words, any alleged conspiracy could easily be the result of thousands of people subconsciously seeing the data in a way that supports their interests. This is the exact kind of phenomenon you see when people use Ouija boards. In other words, instead of the dichotomy between conflict theory and accident theory, every conflict theory I refer to is nested inside of an accident theory.
You may ask me why I'm being obtuse, but I'm not doing it on purpose, this is just how people communicate. At least people in my milieu. Obviously, there are a lot of people who are totally committed Illuminati believers and believers in conspiracies. In my case, and in the case of many others, we use conspiracist language to show solidarity with the masses and to show disdain for the institutions we despise.
This is perfectly honest in my book. If I don't know whether something is caused by an accident or by a conflict, I don't think it's dishonest to frame everything through conflict theory in order to maintain maximum rhetorical pressure on institutions and corporations. I would never do this to an individual with no power or authority, that would be rude. But normal rules of etiquette don't apply to institutions, companies and people who have chosen to set themselves up as celebrities.
>The IMF says Argentina’s economy this year is among the worst in the world
Not really. That graphic shows *growth.* If the US were to suffer a slight recession, would you say it has a worse economy than Burundi, which is growing rapidly, even though the GDP per capita of the US is 370 times that of Burundi?
Argentina is struggling, but per the IMF's numbers, it still has a higher GDP per capita than most countries.
What they actually say about Argentina, includes:
>Decisive implementation of the stabilization plan—centered on a strong fiscal anchor with no new monetary financing, and relative price corrections—has led to twin fiscal and external surpluses, a marked turnaround in reserves, faster-than-expected disinflation, a bolstering of the BCRA’s balance sheet and a reduction in sovereign spreads to multi-year lows. Selected easing of FX restrictions and deregulatory efforts are improving resource allocation (https://www.imf.org/en/Publications/CR/Issues/2024/06/17/Argentina-Eighth-Review-Under-the-Extended-Arrangement-Under-the-Extended-Fund-Facility-550548)
It's also worth noting that not only do some countries (like Sri Lanka and Lebanon) not provide data to the IMF, external evidence, such as nighttime illumination, indicates widespread significant falsification of growth data by less free countries (https://archive.is/L8NrS). The fact that Argentina is one of only 7 countries that admitted to experiencing negative growth probably relates not only to their economic struggles, but to their exceptional honesty.
No major objections to the post unless I missed something. What flabbergasts me is people in the comments taking this as some sort of support of Milei. All the big, welfare relevant things are down- GDP, employment, real income, etc. etc. The main hopeful sign is some evidence that he has recently gotten inflation under relatively the previous mob. It's still far, far above historic levels.
Now it may be that this is just the first phase in shock therapy that reawakens the economy yada yada, maybe ultimately Milei's plan will work out great, but to say "the evidence shows he's doing great" on the basis of this post seems to me a pretty eccentric interpretation. If you have a different theory to me about what's likely going to happen, that's more than fair enough, I can even see how you'd argue that the current macro-indicators aren't the relevant in this case. However the current headline indicators are bad, and Scott makes that pretty clear.
Milei has pretty much done exactly what he said he would do.
Per my comment above, Opinions about him are utterly partisan and cast in stone. Even if Economics was an actual science with laws and methods and not just a shelter for op-ed columnists who struggled to even pass Linear Algebra, any "Economic Indicators" are always so mixed and inaccurate that any graph can be made at any time to support any opinion.
Although I admit I am predisposed to like TGJM, I think it is meaningful that:
-- His ideology stresses "freedom" and he has thought that through w/r/t economics and civil liberties.
-- His messaging has the bold consistent passion of either a maniac, or somebody who is very confident he has learned the Right Way.
-- He has pretty much done exatly what he said he would do.
When Milei was elected at the end of last year, I remember trying to talk to a freind/co-worker about him. Knowing my friend's political leanings (*) I just focused on how Milei's round face and crazy hair make his face incredibly meme-able. Still I noticed he looked pained.
"So I guess you don't approve...can I ask why?
"Well, I've heard he's a fascist."
I started to protest that dismantling state-owned industries and *less* government was the *opposite* of fascism, but he abruptly cut me off:
"I DON'T Want to talk about it!"
SO: 51% of people have been told he is evil and that's that.
* -- he drives around with NPR blasting at gangster-rap volume, gets invitited to private 50-guest concerts with Wilco at KCRW studios, and has a truly staggering number of tote bags.
On Argentinian GDP growth: it is usually measured and graphed with respect to some base year rather than the year before. The shape is called "handsaw", classified in "upward handsaw", "downward handsaw", and just "plain handsaw".
I would love a post covering the recent VP debate. Reasons for a post: I thought the debate was fascinating, and potentially a key moment in American politics. First, it marked a major shift in debate tone (away from name calling, finally...), and second, it marked a major shift in how republicans present themselves (and possibly influences their future policy). Surprisingly, I think the debate might actually have an impact on the election.
Please note also that in South American countries it is quite harder to evict tenants if they insist on staying on property even if the owner don’t want to renew the contract. Eventually yes, they do have to leave, but there are plenty of legal intricacies and the courts are always notoriously slow and especially in Argentina and Brasil judges are generally biased against middle class owners (they do love big banks and corporations, though).
The challenge Milei faces is that historically while there comes a time where Argentinians recognize that some austerity is needed after years of rambunctious fiscal partying, their memory is usually short time and their patience is low. Also, Argentina is extremely vulnerable economically to external shocks, but the population tends to ignore this fact and the opposition usually capitalizes on it with laser focus.
Right now the biggest risk I see is associated with the still existing currency control. The central bank has been trying to slowly devalue the Peso in what is called a “crawling peg”, but investor are impatient and there’s increasing pressure for abandoning currency controls once and for all. But this would probably fuel inflation in the short term while the positive international competitive advantages of a realistic exchange rate would take way more time to be felt.
I would also note his first targets for liberalization were the ones with immediate tangible benefits, such as airline competition, and that he actually doubled social spending going to the poor (but cut the overall amount, including that for the rich, by half). Seems good regardless of any priors, no?
That his radicalism has not backfired also has to do with sentiment. Both the fascist Peronist candidate, Massi, Patricia Bullrich, and Milei were clearly in the liberal camp, and Peronism itself was already moving from the hard right (or left, that distinction is meaningless there) internally.
On housing supply nearly doubling: this is probably true and reflects massive supply used in ways to escape the rules reentering the formal market. A good chunk for air b n b alone… Real prices have already dropped by a whopping third, and of course the one thing where inflation really helps is speeding up deflationary adjustment.
Again I'm surprised by how little international opinion digs into Spanish language sources. Everything I see in anglophone media is misinformed propaganda.
a point about Rent Control: first, it really didn't have much in common with North American rent control. The law was actually called "Ley de Alquileres", -Rental Law- it basically just established 3 year contracts (up from 2 years before) and made mandatory that periodic update of the rate following an index (tracking inflation among other things). Keep in mind, before the law almost all contracts included periodic increases, AFAIK it was 15% every 6 months in Buenos Aires just before the law, when inflation was like 50% YoY. The rental market in Argentina is -and was still under this law- pretty liberal compared to others: there's no obligation to renew any tenant and you can increase the rent as much as you like when writing new contracts. Funny enough, some years the index made it WORSE for tenants than what private contracts where increasing, and some the oposite so in the public perception everybody hated the law. And to my next point, when people say there was insufficient offer they only mention the traditional long term market, they never mention short term like airbnb, which was absolutely booming after the pandemic.
But the most important thing is the datapoint of the increase in units in the wake of the repeal of the law. What nobody mentioned is that the increase was only in the capital of Buenos Aires! There never was any widespread rental crisis in the country! (except a couple other tourist destinations like Bariloche) But why was there one in Buenos Aires? Well, after the end of the pandemic and until 2024 the Argentine peso was really devalued and the country was cheap. This created a boom in tourism that peaked in 2023 and lots of landlords put their units in Airbnb. Now with Milei inflation has skyrocketed in US Dollars and the country is extremely expensive. Tourism is completely dead, digital nomads have long left and Argentines are traveling abroad for shopping. With no tourists, landlords take their units off airbnb and back to the traditional market. The repeal of "Rent Control" is just a tiny plus if anything.
We'll see if "shock therapy" works when you have enough state left you can stop capitalists from burning down the store while they loot it; but the last couple times it was tried things didn't go so well.
To be fair, that was less shock therapy and more electrocution unto Krispy Fried.
>Inflation ... [has] so far ... been stubborn and stayed at the 4% level through the spring and summer.
I think it's too early to say that inflation has stopped dropping. After all, the inflation rate dropped quite a bit from April to May, so it may have just temporarily levelled off, while "catching up."
If you'd model the month over month inflation rate as decreasing by 20% per month since December, you'd end up in basically the exact same place. 25.5% * 0.8 ^ 8 = 4.28% which is quite similar to August's 4.2% MoM inflation.
Such a model would predict September's inflation to be 3.42%, and indeed, the newly released MoM inflation for September was 3.5%.
Of course, trends won't necessarily continue, and Milei's success in bringing inflation down by 86% may not continue, but so far so good.
Spanish liberal economist Juan Ramón Rallo argues in this thread that incomes are rising again and poverty is alleviating: https://x.com/juanrallo/status/1839650359154807108?s=46
How was the poverty rate of Argentina calculated? I expect it is complicated and even more so in Argentina with those crazy inflation numbers and recent regulations slashed
"Based on household income, the National Institute of Statistics and Censuses (INDEC) measures whether they have the capacity to satisfy their food and non-food needs considered essential."
So there's a "Basket" just for food (which is were the 4% monthly inflation figure comes from) and then a "Total Basic Basket" covering food, clothing, transportation, education, and health. Less than 1 TBB is considered poor, from 1 to 3.5 baskets is Middle Income and more than that is High Income.
Right now a TBB is about 600-700 US dollars and the food basket is 250-300, depending on if you use the official or the unofficial exchange rate.
Of note is that this Total Basic Basket doesn't include housing, and renting a 500 square feet appartement in Buenos Aires costs about 500-600 US per month.
Do we know if the basket of goods that are considered essential has been constant over the period discussed?
It's the same since 2016
This does not inspire confidence.
Why? The relevance is that if it stays the same during the period discussed, then comparing poverty rates over time is actually a valid comparison.
Same as if the bucket included buggy whips, and now it no longer does because those are no longer a common good.
Probably worth noting that this approximately how inflation is calculated everywhere
I guess what I meant that it was unnerving that the basket was updated just 9 years ago. If it's getting updated every 9 years, that seems suspicious. On the other hand, nobody said how long the definitions had remained unchanged before 2016. If they had remained unchanged for 30 Plus years, I guess I have nothing to worry about.
Unrelated but it would be cool if there was a stablecoin based on one of those baskets.
My thought too. Poverty rates are often reported using country-specific thresholds: what's considered poverty is different in Ethiopia, Argentina, or the US. Why do journalists write about poverty rates without specifying what they mean, and why does Scott repost them without realizing he has no idea what they mean (sorry if I'm wrong)? It's often not even necessarily useful for comparisons over time, since the (real) threshold may change automatically (in some countries it's defined as something like 60% of the median wage) or manually (even if it's defined as something like "essential" goods, what's considered an essential level has surely changed over time). Since it's often defined in a way that depends either automatically or de facto on the average person's living standards, it's often more of an inequality measure than a poverty measure.
A lot has been said about the 53% poverty figure, but that value cannot be easily compared to other countries, even in the region, as they use different thresholds.
Poverty numbers are only useful for tracking change over time, not absolute values
I also worry somewhat about tracking over time in an environment of uneven hyperinflation; it seems like the way the rate is calculated could lag changing prices, or vary based on the fluctuating inflation rate, or etc.
What I’m unclear about is how much actual power he has. He doesn’t have a ruling party behind him as I understand it but how that affects what he can and can’t do I don’t know. Seems an important part of the puzzle though!
He has enough power to put policy items into serious discussion in Congress and the media, but not enough to force everything he wants through peronist opposition. He must make some concessions to the center-right coalition party which helped him win in the ballotage against the peronists and holds about a third of congress.
So if it was up to Milei, he would blow up the central bank, the argentine peso, labour laws, state-owned companies and, why not, the government as a whole with himself included without a second thought. But the enemies of his enemies which are for now his allies believe in a more gradualist approach, so he can't.
Gosh, Peron. Haven't heard that name in a while. This is why comparisons to other economies gets tricky, the political DNA is a critical element in any attempt to drive change. Unless of course you just lock up the opposition...
I think you should disregard American priors on how hard it is to get bipartisan policy passed. The American system is uniquely bad in the extend that it creates zero-sum dynamics
Working as designed! While it makes it hard to fix things, it also makes it hard to break them: which is one reason, I suppose, that the USA did not get into Argentinas bad economic position in the first place.
It wasn’t designed to be hard to do *anything*. It was assumed that Congress would mostly be working together to achieve the central goals of society, the way the board of your department or your movie club or your corporation or anything else works. But at a certain point, American politics became focused on the disagreements between the parties, rather than the agreements, and now there is an incentive to use any veto point you can for anything done by the other party, even if you secretly believe their policy will do more good than harm.
These features are not working as designed.
What are some examples of things that Republicans and Democrats agree on that aren't being done?
Border security
The bill that they did agree on was a good step in that direction, and if implemented might have inspired more good steps being agreed on. Unfortunately somebody decided that his election chances were better if nothing was done about the border this year, and that was that.
Republicans and Democrats agree about doing nothing on border security so I guess that's working as intended.
Border security and help for Ukraine for a start.
Border security is a good example, but I don't think the Republicans even want to help Ukraine.
In addition to the obvious border security bill, I believe there are many instances of permitting reform and health insurance fixes and things like that, that don’t even get talked about much because they are non-starters.
The Constitution was absolutely not designed with a party system in mind. It was assumed that our Congressmen would avoid partisanship for the greater good of the country. Deeply naive, but I guess you don't know until you know
To be fair, in 1787 they were designing almost entirely from hypotheticals. E.g. nothing like modern party systems existed in the UK, and there weren't any other genuine representative democracies in the world for any jurisdiction larger than a New England town. And hadn't been for a very long time.
So I've personally got a long list of criticisms of what the Framers came up with. But, "how much better could it have come out knowing what _they_ could possibly have known" yields a rather different feeling about the Constitution.
But the Founders abhorred the political parties that existed in Europe the time, even in their nascent state. Obviously, hindsight is 20/20, but it still seems naive for them to think that American politicians were going to avoid the factionalism that existed at the time.
The latest Psmith review, Fears of a Setting Sun, makes it pretty clear that the founders were very aware of the issue of factionalism. George Washington in particular was convinced by the end of his second term that America was doomed and the parties were going to ruin it.
Argentina has more-or-less the exact same kind of "make it very hard to fix and/or break things" system as we have in the United States, with lots of veto points.
This is a big part of why they got stuck in this mess: replacing a bad president embroiled in scandal involves a long and difficult impeachment process that leaves the vice-president in charge anyway, rather than Argentina.
"Nothing gets done" is probably a bad summary of the US system—it's more like "Nothing happens 95% of the time, then someone lucks their way into a big trifecta and every single law gets rewritten all at once". In Argentina, they just finished up a cycle with a huge Peronist trifecta, which is why they're dealing with this mess.
Do you think that there is a meaningful distinction between “not fixing things” and “breaking things”?
Definitely! In almost all cases, it is easier to break something than to fix it. Any system is likely to produce fewer fixes for things broken then things broken. So it’s generally better to aim at making it harder to break things than easier to fix them.
Is there a real money market for this? I'm eager to bet on Milei
Buy Argentine pesos?
Even if you are a massive Milei bull, you should still expect Argentinian inflation to outstrip dollar I flatiron by a lot. Better to buy either government bonds or company stocks of Argentina.
Even if ARS inflates faster than USD, you could still potentially profit using call options on the ARS/USD pair. That would give you the right to sell ARS for USD at a price which might be better than the actual exchange rate at the option expiration date. This is very risky though, of course.
Milei's explicit plan is to abandon the peso.
Lol, I guess buying the peso might be a bad move either way, then! Unless what happens is something between the two. But I agree with Arie that current inflation is way too high to justify buying the peso as a serious strategy.
You can buy shares in an Argentinian equities ETF. The main drawback of this is that not only does Milei have to succeed, you have to hope that when the opposition inevitably gets back into power that they don’t tear everything down again.
Seems like it should be counted as a failure for Milei's approach if his direct impact is immediately wiped out by his successors. His pitch is, "This is how you fix the mess the last guys left us." But if 'fix' is a temporary holding pattern that goes straight back to the previous trendline, what's the point?
In a democratic society, there really isn't a way of preventing some future government from undoing the current government's policies.
Doing things that are clearly good in retrospect works. It’s just hard to be confident of that in prospect.
Exactly. If you think Milei's reforms will be recognized as clearly better than his predecessor by the people of Argentina, you should also think that his movement will gain more representation in the next government.
What's frustrating is that the thing we can measure (Milei's electoral popularity at some future date) is a few steps removed from the thing we care about (the efficacy of Milei's economic reforms). But isn't that how it normally goes? Especially in national political economics, we can't run the counterfactual as a control.
If he stays in power long enough, this should not be a problem. All he needs is enough time that the people can see the longer term trends. If they're positive, he'll get the credit even if that's not accurate. If the trends remain negative, then he'll have to convince them that will change or perhaps that it's the fault of his opposition that will not let him do the truly important things.
That's not quite correct: this has to do with *awfully-governed* democracies, specifically any system with center-squeeze. In a plurality-elimination system (e.g. plurality-with-primaries, two-round system, or RCV), there really isn't a way of preventing wild, discontinuous swings in the ideology of the government.
A majority-rule (Condorcet) system, or a rated voting system, wouldn't have this issue because the median voter theorem means policy responds smoothly to changes in public preferences.
Sounds like the first thing a serious investor would do is to overthrow the democracy.
I mean he could try and kill all peronists but I really don't think that's in the cards.
If it showcases that it actually improves things notably, then that makes it harder to repeal. If it works well enough in time, then that also makes so he (or someone more aligned with him) is more likely to be re-elected.
Most laws to try to improve an area have this issue, that they can just be repealed and lose ~all of the benefits. You can avoid this somewhat with more gradual transformations, but obviously you're not going to have as much effect.
(But also reverting some of his actions is probably harder, recreating a bunch of governmental ministries is probably harder than it was for him to tear them down.)
What's the opposition's pitch? "Let's turn the money printer back on"?
>He eliminated ... the Ministry of Women, Gender, and Diversity
Doesn't seem too hard to guess.
Yeah, basically, austerity is for improving the stability of the economy in good times when you can afford to slow down the economy, in bad times you have to suck up deficit spending that's tightly targeted at getting the economy back on track first.
Of course Argentina has been a clusterfuck for a while, so who knows if any of the conventional arguments apply there.
Er. Wasn't that Venezuela doing the oil-economy thing, not Argentina? Wikipedia puts Argentina's mining-related activities (including oil and gas) at 4% of their GDP, hardly "staking their economic fate" on it.
The classic statement of Argentine weirdness is that they thought they were a developed country before they actually were due to an agricultural export boom about a century ago, and ended up with an entrenched welfare state they can't get rid of. I've no idea how accurate/drastically oversimplified that is, though.
It's not entirely true, but it's true enough. Funnily enough, it happened twice.
I think it's a half-truth. Yes, all the takes about Argentina dropping down development levels is misleading, because during the 'baseline' period (early 20th century) they were propped up by an agricultural export boom.
However, other countries which experienced the same boom (New Zealand and Australia come to mind) and spent a lot on public welfare nevertheless managed to translate that into continuing high income status (while continuing to rely heavily on primary exports).
My intuition is that its not the welfare state as such but more the general quality of government/institutions, which tended to tax the productive part of the economy (ag exports) to fund elite, urban consumption/corruption (as well as welfare). This saps the economy over time, why invest in increased production when the government expropriates a third of your soy export revenue. Poor institutions also showed up in mismanagement of the monetary system that depresses investment.
In terms of foreign exchange, Australia largely pivoted to mining; it has an absurd quantity and diversity of mineral reserves relative to its population. New Zealand is even more reliant on agricultural exports than Argentina is (although it also makes a fair bit from tourism these days); it had a rough time in the 1970s and 1980s before becoming pretty much a model country for foreign investment, and it's the world's least corrupt country (and even then, it hasn't become ultra-rich - living standards are somewhere in the Spain-Italy range). Not sure how viable either of those would be for Argentina (although Chile could probably learn some things from Australia).
Yeah fair points, no two countries are ever going to be perfect parellels (for one, NZ and Australia were somewhat insulated economically by being part of the British Commonwealth, at least until 1970 or so). I'm not really trying to say what Argentina could do today, just speaking against the idea that Argentina's problem was primarily a welfare state that couldn't be supported after agriculture prices dropped.
I'd push back on Australian mining a bit. According to this: https://ourworldindata.org/grapher/natural-resource-rents?country=ARG~AUS it wasnt until the 21st century that Australia moved ahead in a big way (in absolute terms and compared to Argentina) in natural resource rents. I think its another case where superior institutions/government helped; Australia simply managed the windfalls more wisely than Argentina. Probably does help explain why Australia is so much richer than New Zealand today (unfortunately for me as a Kiwi!).
“ why invest in increased production when the government expropriates a third of your soy export revenue”
Because you get the other two thirds. Like… the government likely takes about 20% or more of your income. Presumably you still maintain employment. Hell, I bet you still seek higher income.
It’s the same thing.
I mean, obviously there is still some incentive to produce. But directionally, yes of course a tax on revenue reduces production at the margin, particularly discouraging long term investments.
More concretely, if there is a potential investment to increase production by 10%, you'll do it if it costs 8% of your current revenue. However if the government takes a third of the increased revenue, you won't.
If you think about it, you're basically arguing the supply curve for crops is vertical, and therefore prices don't effect production.
Argentina's big export sector is agriculture. I'm having trouble finding the article in IIRC the WSJ but apparently one of the things that makes the country incredibly weird is that is has *enormous* regional and sectoral disparity in productivity, so much so that they adopted different exchange rates for different classes of transaction to try to address the lopsidedness that it created.
In essence, AIUI Argentina and especially the pampas plains are basically comically productive and support a robust export market, which would normally cause currency appreciation as it creates external demand for pesos to buy ag sector exports.
But the ag sector in Argentina, like that in other countries, is capital (especially land) intensive without being commensurately labor intensive, so you still have most of the population living in urban centers and working in things other than ag, and Argentina's other sectors are nowhere near as productive or competitive as their ag sector, but would by default find themselves saddled without the capacity for currency depreciation to make them internationally competitive because the ag sector's productivity saddles them with the same peso. This is basically the same problem that Germany and Greece both using the Euro causes, except in this case it's not an inter-country currency union, it's intra-country.
Argentina tried (not sure if they still do this) to alleviate this with ag-sector specific exchange rates to try to deal with the issue -- which is a conceptually bizarre approach done by basically no one else -- but I believe that it's one among the innumerable other problems that contribute to the Argentinian economy making no sense and being unable to effectively equilibrate.
That’s really interesting!
I don't see how "currency depreciation to make them internationally competitive" would be good for Argentine urban workers. You can always stay competitive by accepting whatever pay you can get on the market. Currency devaluation allows you to get higher wages or avoid a wage cut, but it increases prices by the same amount: the prices of imported goods for obvious reasons, but domestic prices also increase if wages increase. Currency devaluation just changes the units, on a free market it shouldn't change either wages or prices in real terms; on a free market, external devaluation (i.e. currency devaluation) and internal devaluation (keeping a strong currency but cutting wages and prices) should be more-or-less equivalent.
The only reason I see countries sometimes prefer to devalue their currency is that nominal wage cuts are extremely unpopular, and in some cases made legally prohibited or disincentivized (by laws that are themselves extremely unpopular to repeal). If in some sectors and regions the real market value of labor decreases, it results in unemployment and reluctance to hire, especially on highly regulated labor markets. Having some general inflation allows aligning people's wages with the market value of their work without the unpopularity of a nominal wage cut; it's essentially a way to dupe people into tolerating a real wage cut.
But inflation in Argentina has steadily been high enough that this isn't a problem anywhere; there has never been a problem of the currency appreciating because of the productivity of farmers, it's always been depreciating rapidly.
If Argentine farmers get less pesos for a dollar when exporting their goods than factories do under a separate exchange rate system, that's effectively just a redistribution program from farmers (especially landowners) to the urban workers, except in a roundabout, inefficient way. Note that this is different from if Greece had its own currency and devalued it: Argentine workers can use the same pesos they get for the export goods they produce to buy food from Argentine farmers, while the different exchange rate applied to farmers reduces the prices farmers can get by exporting (as measured in pesos); while Greeks would have to buy expensive euros (as measured in drachmas) if they wanted to buy goods from Germans.
Also, when it comes to which sectors would "need" a currency devaluation to remain competitive without nominal wage cuts, what matters are the rates of change of productivity in each sectors, not the current productivity: if agriculture is more productive than industry (in what sense? international comparisons?), that doesn't mean industry "benefits" from currency devaluation (the differences in productivity are presumably already priced into the wages and land rents people are used to), only if agricultural productivity is increasing faster than industrial productivity, or especially if the latter is decreasing outright, does.
“Currency devaluation just changes the units, on a free market it shouldn't change either wages or prices in real terms; on a free market, external devaluation (i.e. currency devaluation) and internal devaluation (keeping a strong currency but cutting wages and prices) should be more-or-less equivalent.“
There is no such thing as a free market, anywhere, ever. And when you’re talking currency, you’re handicapping yourself to act like there is.
The reason that it’s generally unwise to pursue significant currency manipulation is that it’s risky. Policies of intentionally devaluing your currency can be pursued but carry the danger of sparking hyperinflation. Some would say even the indirect devaluation of moderate government debt spending is so risky (though you can mitigate this through progressive taxation, since it forces people who might have the means to trade in foreign currencies to pay a premium for your currency at least some of the time).
In the real world, currency manipulation is a high-risk, high reward strategy that has been proven so effective that you have to punish it in international trade agreements lest you be placed at a disadvantage.
yeah sorry I shouldn't do this before coffee. Thanks!
Argentina has it notoriously difficult to borrow, for all the obvious reasons.
Runaway inflation means that first, you have to handle that, and it's rarely a pleasant time. Most of the time, it means _creating_ a recession.
Promising to give free money back to people who are presumably annoyed it has been taken away from them is always a good pitch. Look how hard it is to reform anything relating to subsidises in the US, for example.
What you call free money is not necessarily free money. That's your ideological framing. I believe social programs represent people being paid what they are owed
Owed by whom? Is this true by definition of every social program?
Owed by the public. Not true by definition of every social program.
OK. So to rephrase for you, some social programs represent people being paid what they are owed. Thus I assume some don’t.
Do all social programs represent people being paid what they are owed? If the government sets up a social program to print money to give everyone in the country $1000 a week with no conditions, are they still being paid what they are owed?
You've answered your own question. Guess there's nothing for me to do here..
I mean, that's called a UBI. If a country was just a closed economy what that actually would be equivalent to is taxing all sorts of monetary assets (bank accounts, stocks etc) and redistribute the money uniformly to the entire population. It would thus encourage investing money as quickly as possible into capital, since it's not going to be much good on its own. It's by no means some kind of insane proposition, per se; the main problem is that the currency changing value also affects the import-export trade balance because the other currencies don't change necessarily at the same pace.
The point of welfare here is also: people all participate in a social contract, whose purpose is to provide well-being to society as a whole. Thus, shouldn't they all get a share of the windfall, regardless of their specific contributions (which might see them more or less successful), and merely on the basis that they uphold that contract? Similarly, given that those that succeed spectacularly can only do so thanks to the framework of civilization upheld by everyone around them, don't they owe something in exchange?
That's the philosophical and ethical argument. Then we can go into the technical one of how this or that implementation shapes economic incentives and thus what actually happens. But they're two different levels; you could probably make a case that economically speaking killing the elderly would boost the GDP, that does not mean people will think that killing the elderly is OK. Material well-being is *part* of people's objective function but it's not the whole story.
Economic movement is what counts so the removal of any stimulus is risky. The end game tends to be just exposing national assets to foreign acquisition which tends to send the revenue in the wrong direction. So, as undesirable as subsidies may seem they are essentially a protective measure against aggressive acquisition and asset stripping.
Pre and post Soviet Russia gives a classic example this shift of ownership and the political consequences. Yes the assets were handed to apparatchiks but they weren't exactly turned into local economic activities.
"Make Inflation Great Again"?
“This shit won’t work, and will just make people suffer more” would be my guess. I’m sympathetic to that idea, and this being my first exposure to the guy I am going to assume that if/when he fucks shit up in some new way, libertarians will dutifully explain how his ancap ideas would have worked if only they were done harder.
Libertarians and Communists believe themselves very distinct. But both are very unwilling to admit that when anyone makes a real go of implementing their ideas at scale it turns into a clusterfuck of new suffering. For reasons that can be distinct or remarkably similar.
Unfortunately the inflation metrics above are a good example of the reason it will be very difficult to get anyone to agree what actually went on here. Clearly what was happening before wasn’t working, but libertarians tend to be like communists in another way. They are often able into identify problems but suck ass at prescribing solutions.
Libertarians _do_ have a list of "here's the times someone tried our ideas, and the time our guy was in power is widely regarded as 'the good times' by those who lived through them, until non-libertarians attained power and returned everything to crap."
Do tell.
The United States of America is founded on something that is essentially a libertarian or classical liberal ideal. And that has worked out very well, indeed better than anything else has ever worked.
Personally, I suspect the U.S.'s success is moreso due to oceanic buffers and self-sufficiency.
Albania on the other hand, after they escaped the grips of communism, they also went turbo capitalism and the entire country fell for a Ponzi Scheme.
Did you not hear that our “libertarian ideal” resulted in thirty extra years and a horrific war for us to finally outlaw chattel slavery?
All of which, even if you want to lay at the door of libertarianism or classical liberalism, are not even blips on the contribution to human welfare that the US system of classical/market liberalism has made. (You could also note that those are norms that were very much standard at the time, and the US got rid of it, at least in part, because of its founding principles)
Thank you for letting me know that there is no pressing need to ever take your views seriously. It’s a real time saver.
I mean, slavery was not the *fault* of liberalism, but it's ridiculous to say that a country that literally still had millions of slaves was founded on an ideal of libertarianism. At the very least it had to be founded on some kind of very dirty, very approximate compromise, because slavery is kind of very very much not libertarian.
As others have said, there's always a chance that a good chunk of the overall average welfare of the US is just due to a bunch of factors that have little to nothing to do with politics. Plenty of natural resources, plenty of land, a geographic position that makes them into a fortress, two oceans on the sides, a narrow bottleneck to the south and a friendly country full of ice to the north. And even putting aside slavery, the way the US dealt with the native populations and conquered all that land and all those resources isn't exactly stuff that would pass the NAP test.
I wouldn't call it libertarian, there's still plenty of state intervention. Also it depends on what counts as "working well" for our purposes. Becoming the foremost military and economic power of the world? Sure. But the US have more internal inequality and poverty than other western countries. If your metric is not the sum total of wealth, but having a distribution of quality of life that has both high mean and reasonably short tail in the bad end, then Scandiavian states have the US beat by a wide margin.
Well, I can imagine a lot of things worse than libertarianism, many of which have actually happened; sometimes you're stuck implementing a suboptimal policy (such as dollarization) because if you tried one that's better (managing your own money supply responsibly) you'd fuck it up.
my astral projection of this post worked ✨️
Seriously, what is up with Estonia?
I assume its economy was too integrated with Russia's: sanctions, war, etc.
But the same chart shows Russia itself doing fine! (which I'm also surprised by)
Russia has a war-economy. Structurally, the country is being surgically stripped clean of anything of value for a post-war-economy, which is why everybody is eager to keep this pointless stalemate going for years to come
Russia has a bunch of ideologically aligned countries that are still willing to trade with it. Plus, they get to count artillery as production, but don't have to count spent artillery shells on the negative side of the ledger.
Meanwhile, it looks like exports from Estonia to Russia in 2020 were about $1.5B worth (compared to their biggest trading partner, Finland, at around $2.3B). This dipped by about $0.3B/yr by 2023, which isn't quite 1% of their GDP. Maybe the simple export number isn't capturing the full story of loss of Russian cooperative economic activity.
Wages are up, unemployment is down, but for basically the same reason that happened during the Black Death - because everyone available is being sent to the frontline (~30,000 per month) or, for people with the means and the marketable skills, leaving the country (~900k according to WP). In the medium to long run, Russia's economy is doomed, whether or not they win the war. They are doing their level best to destroy everything of value in Ukraine so they have little to gain there if they win, and they will be the pariah of most of the world in any case. The best they can hope for is to become the mining department of China.
Wages were up after the black death because Europe was at its carrying capacity before it. Not remotely the case in Russia.
So, nothing to do with good old fashioned supply and demand?
> In the medium to long run, Russia's economy is doomed, whether or not they win the war
It was previously said that their short-term economy is doomed as well. Now people have moved the goalposts to "their medium-term economy will fail".
And what conclusions, if any, do you draw from that?
Conclusion is that Russia is more resilient that it seems. From what I understand it’s thanks to their economy being pretty well managed for an otherwise corrupt and mismanaged state.
Russia's GDP is high because of how much they are investing into the war. Unemployment is also very low because there is intense competition for workers who are being directed into the army at an alarming rate. The problem is that it's likely not sustainable. For now, Russia is relying on its sovereign wealth fund, but the enterprises that helped it build that wealth fund are running at a loss for the first time ever. Russia will eventually run out of money to spend and will start having to run a huge deficit to keep up this level of investment in the war. They've already stopped investing as much in the civilian sector and the civilian populace is already suffering as a result.
What would Russia running a deficit look like? Who would lend to them?
Potentially its own citizenry, enticed by a combination of high interest rates on sovereign debt and patriotism?
"Buy war bonds!"
China, maybe, although they're starting to be known as really nasty creditors. Also, possibly India?
If they keep losing 300k men per year and those men are mostly the least productive / poorest members of society (such as Wagner's prisoners), it's quite possible that it will end up being sustainable thanks to Russia's economy being mostly based off natural resources.
Russia was running a birth deficit even before the war. That is not sustainable for any economy. And if anything, an extraction-based economy is more reliant on less-skilled labor than an economy that is based on manufacturing and other high-skill jobs.
They’ve got Uzbekistan and Kazakhstan nearby, both with a 3+ fertility rate over the past two decades. They don’t need Russian labor and things get more automated over time.
My guess was that Russian GDP decline was already “priced in,” that sanctions had done all the damage they were going to do and GDP growth would no longer be effective. I looked it up and:
https://www.macrotrends.net/global-metrics/countries/RUS/russia/gdp-gross-domestic-product#:~:text=Russia%20gdp%20for%202022%20was,a%2011.81%25%20decline%20from%202019.
They only have data through 2022, but it looks like Russian GDP peaked just before their invasion of Crimea, steeply declined after that, and then started a rebound which was somewhat affected by the outbreak of the broader war.
1) Sanctions on Russia are very leaky due to a mix of preparing for them, extended period of sanctions leading to new trade routes, and a significantly larger proportion of world GDP held by non-NATO countries who are not participating in said sanctions.
2) Economic stimulus: Russia is both running a deficit and drawing down in very large reserves accumulated in the 2010s. It is also taking huge numbers of economically unproductive young men (prisoners, unemployed men in small villages and from the poorest regions) and effectively giving huge cash infusions to their regions via pay and very large cash bonuses to their families if those men die (which many, many have). It is, in practice, an extremely large cash transfer to poor people and areas.
It's not that. Lithuania also shifted a lot of business from Russia, but is doing very well and growing. The problem is that Estonia has the lowest debt in EU, and continues to resist spending, thus imploding from inside with self caused austerity, when in fact they should borrow, invest and spend. The situation is inverse to that of Argentina, Estonians are “too responsible” for their own fault. There is an economic phenomenon called paradox of thrift, this is what is going on in Estonia. Furthermore, they are inflicting even more pain to themselves by significantly raising taxes (VAT is 22% from 20% and will increase to 24% next year). Also, they are increasing other taxes. This is deflationary and will further sink their economy. It's self harm, someone should help them.
Yes, this is true. Of course, the government inflicting these high taxes on businesses is rather unpopular and will probably be replaced by the opposition soon (which means right-wing populists, whatever that's good for). We are also about to inflict some new "going green" type of economic self harm any time now, more than most European countries, as I understand (the place was lately ranked #1 for Environmental Performance among countries, another example of being highly Responsible).
Maybe they should have their own currency and actually benefit from being thrifty
This won't happen, EUR is a stable and predictable currency used by almost all of Estonia's trade partners, and also gives credibility for foreign investors in the country. EUR was introduced exactly because of it.
No, Estonian economy was not so tightly integrated with Russia's, though some supply lines have been disrupted. The recession is more closely related to the cooling of the markets in Scandinavia. "Sales in foreign markets have been constrained by the fact that the main markets for Estonian exports have performed worse than the European economy as a whole and by the appreciation of the exchange rate against the Nordic countries", as per economy gurus. Locals are wary of the future and save instead of spending; interest rates for loans are huge, energy is expensive. Still, I don't understand how it's so much better in Latvia.
Edit: ok, apparently, pre-war the trade with Russia accounted for 8% of Estonia’s exports, 10% of its imports and 46% of natural gas imports. That's not nothing.
Worth noting that at least in Finnish discussions Estonia (which has quite a bit more of a deregulated economy, lower taxes etc. than here) has been treated for ages kind of like how libertarians internationally are treating Argentina now, ie. prime example of the virtues of market that's going to zoom past us Any Minute Now.
In the UK it's treated as the shining example of digital government, with op-eds along the lines of, "In Estonia, the entire fisheries ministry is now based in the cloud."
it seems like they're doing pretty damn good?
https://tradingeconomics.com/estonia/gdp
i'm not an expert on eastern european economics but i get the impression from flipping through the charts of nearby countries since the 70s and 80s that estonia is leading the pack
we don't exactly have great experimental methodology, and there's tons of confounders obviously, but this doesn't exactly look like an example of failed policy
when i compare gdp growth % per year to, say, the whole european union, it looks pretty impressive
although i'm not sure exactly how much stock to put into that
Yeah, Estonia is the shining star of post-Soviet republics. It's a fundamentally sound country with some temporary economic problems that are mostly over by this year. Being a neighbor of Russia's creates an inherent swinginess.
We treat them as honorary Nordics. :-)
I assume that it just looks so extreme because of the color coding. Note that ALL countries with 0% to 3% get light green, and ALL countries with -3% to 0% get light red. In data from [1], Estonia is at -0.5%, but Germany at +0.1%, Sweden at +0.2%, Austria at 0.3% could easily have ended in the red zone as well. Estonia is assumed to be bad in 2024, but not "totally outlier bad". They had a very tough year 2023 (second worst in EU after Ireland). I guess the general reasons Estonia was hit hard is the close connections with Russia: it had imported lots of Russian energy, had an economy entangled closely to Russia, has a large Russian minority, and so on. But
https://economy-finance.ec.europa.eu/economic-forecast-and-surveys/economic-forecasts/spring-2024-economic-forecast-gradual-expansion-amid-high-geopolitical-risks_en
Estonia is a great success story. If you look at results at greater time scale, you can clearly see it and also notice that the line is not smooth, it has up and downs all the time. Judging the success or failure at the particular time point is pointless. It could be many reasons why at this time it experiences recession (Russian sanctions, slowdown in Scandinavia) but ultimately it doesn't matter.
Probably the same story is about Argentina. It is meaningless to judge it from such a short time period. If you don't know deeper aspects then these indicators can be misinterpreted. Scott is clueless about these economic aspects. I would trust Noah Smith or someone who knows this stuff much deeper.
For example, nitpicking if Argentina had or didn't have rent controls. Obviously they had. They were different than the rent control in the US. So what? Some may think that it means that Argentina rent controls are not relevant. They are, just in a different way. The fact that availability of rental property has increased, means that abolishing rent controls have a strong effect. It also means greater financial incentives to build more or turn existing space into rental property. It just takes time for owners to react. And of course, the confidence that Milei politics are going to stay is also very important.
Left-leaning commentators will mostly see that poverty has increased. It has but unfortunately it had to happen temporarily. I went through post-Soviet crisis and it was much much worse than Argentina had ever experienced. I am sure that many policies were wrong at that time. Maybe even today we have more poor people than during Soviet times. And yet, the Soviet times were terrible. All people equally poor and miserable, every day waiting in long lines to buy essential items. Today we have all the opportunities that we could never had during Soviet times. We can take care of poor people if needed but don't make that an excuse to stop important economic reforms.
Estonia, if you zoom out, is mostly a straight "line goes up" in post-soviet times. Argentina is much messier and less straightforward (mostly but not entirely in bad ways).
Argentina doesn't have 30 years experience under Milei-type of reforms. Look at the start of those 30 years of post-Soviet Estonia. You could conclude that it was unmitigable disaster.
In fact, even today many powerful people argue that we need to restore the Soviet Union because it was more prosperous.
It sounds like you're Estonian (or at least know more about Estonian economic history than I do), do you have recommendations for anything good to read on post Soviet Estonian economic history?
I am a Latvian but it will be almost the same as Estonian story.
I think Noah Smith has the best review about these economies. In general don't trust natives who are specialist in this field. Most of them will have their own subjective ideas, for example, that their economy is terrible with very little data to back their beliefs.
https://www.noahpinion.blog/p/how-are-the-post-soviet-economies
thanks
Hi, Argentine here!
>He laid off 24,000 government workers (other sources say 70,000).
He announced that he wants to lay off 70,000 workers, but hasn't reached that number yet. Today a lot of government contracts end, so if they don't get renewed (and it has been announced many won't) we could get closer to that.
>(the 195.23% number seems implausibly high to me, but I can’t find any contradictory claims, so I’m nervously letting it stand)
The former rent law was awful and indeed, landlords prefered not renting their properties rather than renting them under that law. So that number does sound believable to me.
Thank you, I've changed the 70,000 number.
Why did so many landlords avoid renting out their property? Isn't the $0 they get from not renting worse than whatever unfair price the rent law forced them to charge?
An occupied unit has higher (and more variable) maintenance costs than one sitting vacant, and a restrictive law might involve nonmonetary costs. If rental revenue divided by hours of compliance paperwork and other managerial hassles is less than the hourly rate you could earn doing some other job, might as well not bother.
Right, but then why not sell it?
I guess one possibility is because inflation is huge and volatile and everything else seems riskier -- at least an empty apartment in Buenos Aires is a reasonable store of value in a country where value tends to go up in smoke.
that's exactly why. investment apartments are used bc of capital controls and wide distrust of banks. they aren't really meant to be rented. my family in SA collectively owns over a dozen empty apartments, bc they can't put their cash anywhere else.
Okay that is wild. Reminds me of some family stories my elder relatives used to tell about the early 1930s when US banks were failing all over the place.
Just wait until you hear about the common practice in some parts of Africa of building houses brick by brick for savings.
Buildings sit under construction for years. When the owner gets some money, they buy some bricks and add them, when they don't have money, it just sits there.
Same in Russia. Corrupt officials store wealth in major city real estate. They usually don't rent it out because they don't really need the meager income stream nor the headache, so it just sits vacant.
Coincidentally: this is one of the sources of crypto's absurd-at-face-value market cap.
Im not Argentinian, but most likely, no. You have to maintain a property that you are renting, so better to not rent it rather than pay for whatever breaks. Plus if you rent it for a loss, you are most likely locking in that loss for a number of years. Better to wait it out and see if you can get something later.
In the late 1980’s in Berkeley, there were boarded up houses that landlords had taken off the market because renting it out was a net negative. I imagine that, with lower interest rates, those converted to homeowner-occupied housing.
Something similar is happening to landlords in New York City. Many storefronts are sitting vacant because if the landlord accepts a lower rent than they're currently asking for, the value of the building on paper will fall, and the bank that loaned the landlord the money to buy the property will demand cash to compensate for the fall in the (paper) value of the loan's collateral. Which leads to the ironic result that the landlord will lose more money by renting the unit than by leaving it empty. :/
Something, something, and thats why we need a land value tax! Not but seriously, its an abject failure of the free market that people are incentivized *not* to rent property at market rate, all because of land speculators artificially restricting supply to keep values high on paper...
The direct reason that Berkeley landlords were not renting was that Berkeley’s rent and vacancy controls prevented them from turning a profit. Believe me when I say that no one was then speculating on residential housing in Berkeley. The left was fully in control of the city, had been for a long time, and still are. What changed was that interest rates dropped to the point that it made sense to convert all of that rental property (which makes sense in a college town) into resident-owned homes (which does not). At no point was the free market the problem in Berkeley.
There was also a component of speculation (this sounds derisive, but I assure you it is not, I was one of the speculators) involved: With an election coming, there was a good chance of changes being made to the laws, it was better to take your chances for a few months that get stuck on an unfavorable 3 year contract.
Another factor is that with 3 year contracts, it could easily be profitable to leave your property empty for one year, gamble that the rent control law will be repealed, and then implement a more favorable contract.
You see a similar, but smaller, effect with interest rate changes in America affecting housing supply.
I'm in Spain, and here we have been going down a similar path for some time now. When you take on renters, they are in for minimum 5 years. You cannot raise rent above the official inflation rate during that time. You are not allowed to ever enter your own house during that time period (5 years!) unless the renter allows you to (they could be destroying it, whatever, doesn't matter, you have no right to go in). There is a massive problem of "okupas" (squatters) here, these enter other people's houses and can stay there for years without the police/judicial system able to dislodge them. No new AirBnB licenses allowed. Soon a law banning short-term rental will be passed (ie. 6-12 month rental for students, digital nomads etc). And all this has done is caused rental prices to soar (the opposite of what they are trying to achieve) because no house owner in their right mind would want to rent out their house under such leonine conditions. The new idea the socialist/communist government here is kicking around is to start fining anyone who owns a house which they are not renting out...
So yes, sometimes not renting is the better alternative...
That's interesting. Do you know if the laws are roughly similar in Portugal?
I ask because I was recently at a conference in Porto discussing, among other things, housing policy. The presenter (a sociologist from Lisbon) pointed out that many prime-estate apartments in both Lisbon and Porto were boarded up (which I saw for myself: Lots of prime real estate decaying in the middle of the city, judging from sunken roofs and empty window frames). The presenter blamed it on "capitalism" and "not enough regulation". I was wondering if the problem was not exactly the opposite. But being a foreigner and with very limited knowledge of Portugese housing policy I did not want to criticise my host. Still wondering, though.
The laws are not as bad here in Portugal as in Spain. We can do rental contracts minimum 1 year and for short-term AirBnB-style renting there is some burocracy, but not too terrible. You can visit your rentals in the last 3 months at least. Things used to be worse but our government went bankrupt a few years ago and the IMF forced some reforms. One law that we have that sucks is that if you rent to someone with disabilities or old age (over 65) the lease becomes perpetual. You are punished if you are nice. One bad thing is that rent taxes are quite high (25%) so most people rent in the black market.
The case you mention of the houses falling a part is different. During our freedom revolution (1974), all rental contracts were frozen. I have a family member that has a tenant that pays 4 euros per month. The mother died but the daughter inherited the rental. Some of these tenants don't live in the house any longer, but the rent is so cheap that they keep renting. This has improved a lot as some of the old renters die and Airbnb made it lucrative enough to buy out these old contracts. But there are still many of them still.
Many thanks for your response Ricardo. I can see how that explains the puzzle.
(Scratching my head as I walked through beautiful Porto I half-though the explanation could be drawn-out legal quarrels among multiple heirs to an estate, about who owned it & who should pay for the upkeep. Since so many houses in central Porto are impressively old! But frozen rents since the 1974 revolution explains it.)
Spanish landord here. I own two flats, both rented out.
The "good" one has had its rent increase capped below inflation for three years in a row, first "because of COVID" and then "because of Ukraine", and yes, it doesn't make sense in any case.
The bad one has had its renters become squatters, haven't paid a single € in two years now. The judicial process started more than a year and a half ago, cannot (by law) finish this year (this is a complex issue, but the current government has been extending a "temporary" COVID measure for 4 years in a row, not allowing you to evict your tenant, even if they don't pay, while you still have to pay your mortgage, taxes, maintenance, etc). All in all, I calculate I'll be out of three years of rent (~25k€), and around 18k out-of-pocket costs, plus judicial costs that I won't recover because renters are "vulnerable" and thus have free justice and can declare to be "insolvent" and just not pay.
According to some statistics I currently cannot find, the current probability of a rental unit becoming delinquent in Spain is about 17%, per rental (not per year). But you incur that risk on every tenant. The corresponding insurance for this is about 10% of a year of rental income (not trivial at all), and only covers up to 12 months of rent, while judicial process is north of two years.
Ask me if I'm going to close or sell flats as soon as I can. After 20 years of renting out several flats without incidents. Bad laws, and even worse, bad judicial procedures (themselves governed by another, different set of bad laws) can, and do, kill markets.
> You are not allowed to ever enter your own house during that time period (5 years!) unless the renter allows you to (they could be destroying it, whatever, doesn't matter, you have no right to go in)
I mean, that seems sensible. Except that if they're destroying it and thus damaging your property I'd expect police can be involved and enter with a warrant. But a landlord showing up with a second key and entering the house I'm renting without my consent should not be a thing. The house might be theirs, but the stuff and personal information it now contains are still mine.
Yes, of course, but we are not talking about creepy surprise visits by a landlord with a spare key, we are talking about a situation where the landlord cannot even call up and say, hey, when could I come and have a look at my house to make sure evrything is okay. I think a logical compromise would be to have a mutually agreed-upon visit let's say once per year, but even that is not allowed in Spain. But not sure how this works in other countries to be honest.
As to destoying the place, how would you even know they were doing it if you can never enter and have a look?
Do you know what "supply of rental housing" exactly means? I suspect that it means the number of flats that are currently available for renting. So I assume that it is NOT counting ongoing rental contracts.
If I am right, then those are very low numbers with lots of fluctuation. In normal housing markets, only 2-5% of the flat are available for rental. In tight markets, it's lower, for example <0.1% in Zurich, or 170 units for a population of 400,000. And this number varies a lot. For example, the main months for moving in Switzerland are April and October, and I would assume that the number of available flats in Zurich triples every year before these months because many people move out.
I am not saying that the number for Argentina has a trivial explanation like that, but tripling may not be as spectacular as it sounds.
EDIT: In a comment further down, darwin found out what was measured: "the offer for rent" (according to google translator). I assume that this indeed means the number of flats that are offered for renting.
SECOND EDIT: Thinking about it, this number will also increase if lots of people can't afford their rent anymore and are forced to move out. This seems like the most plausible explanation, and I find it conceivable that it leads to a tripling of this number.
Because the law stipulated a 3 year minimum contract, controlled how much you can raise prices (with our inflation a big deal), forced you to register the contract with our IRS-equivalent (we are big on tax avoidance) and added other restrictive measures. Everyone knew that the next government would get rid of it, so they'd rather wait until that happened than be locked in at unfavorable rates.
Some people explained the details better than I could in other comments. I just want to add that the old law was truly AWFUL, like some sort of reverse-masterpiece. It somehow managed to screw with both landlords and tenants at the same time. It was a given that it would be modified, and probably sooner rather than latter. That's why many landlords speculated with the law being repealed in the short term (correctly, in hindsight), and, for the time being, decided not to rent it under those unfavorable conditions.
But also, do we know that the 195.23% increase is actually in the total number of units rented out or available for rent, or in something like the number of units offered right now (which is more believable and is partly a measure of turnover as well as how long it takes for a unit to get snatched up)? EDIT: in another subthread, darwin found it was actually units offered: https://www.astralcodexten.com/p/preliminary-milei-report-card/comment/70979479
Thanks.
Do Bukele next.
I found https://www.slowboring.com/p/nayib-bukele-el-salvador (sorry, paywalled) really interesting. Yglesias' take is that yes, many people tried "throw criminals in prison" before, many people even tried "be really really tough and try super hard to throw them in prison for a long time before", and it's not really obvious why Bukele succeeded where everyone else failed (it might be because he lulled the gangs into complacency by making a deal with them, then backstabbed them before they could react?) I've never found any other source that even goes into as much detail as Matt and I wouldn't be able to begin to figure out what he did right.
My sister-in-law is a second-generation Salvadorean immigrant, but I always worry that I'll be opening some horrible wound if I ask about politics back home.
There's a second, more recent Slow Boring article on the topic here (also paywalled): https://www.slowboring.com/p/latin-america-has-bukele-fever
Matt Lakeman did an incredibly detailed breakdown on Bukele's reign here: https://mattlakeman.org/2024/03/30/notes-on-el-salvador/
That breakdown is fascinating. One of of the most striking points he makes, something I wasn't aware of, is that the Salvadoran gangs were *really freaking poor*:
> *El Salvador’s MS-13 and B-18 are not in the same league [as cartels]. Their bread-and-butter is extorting poor people in an impoverished country. Their expertise is localized brutality rather than transnational business. The narco gangs would annihilate the Salvadoran gangs in any fair fight.*
A seemingly reasonable point from the Banished Realm:
"El Salvador, by contrast, is basically just a city state centered on San Salvador. The country is the size of New Jersey, and the overwhelming majority of the population is within the capital region. If you get kicked out of San Salvador, there is no alternative power center to hide in the shadows of, and the government doesn't have the sort of federational subdivisions that limit jurisdiction and reach in the same way a larger country does. As a result, anti-gang successes in the capital are far more effective for nation-wide effectiveness than in other countries."
https://www.themotte.org/comment/235611?context=3#context
Oh wow.
To give another comparison point for non-americans, the country is the size of North Ireland. Yeah, I can see why Bukele's success might not scale.
I suspect a lot of such claims are just a panicked reaction by left-leaning people who are extremely scared of El Salvador's policies spreading to other countries. I.e. imagine if Mexico repeats his policies perfectly and imprisons 1% of their male population in horrible conditions without trial... and it works? This will immediately have a cascading effect on US policy discussions and thus the whole world. Before you know it every country is racing to imprison the most violent 1% of their men and the idea of "fair trial" just sorta goes out the window.
My own theory is that rounding up every single "scary" looking dude under between the ages of 16 and 40 in (say) Detroit would instantly bring down the violent crime rate by a factor of 10.
I think it's less panic and more a general sense of "It can't possibly be that simple, right? Otherwise everybody would already have done it?"
I think part of the reason is Bukele's crackdown was way more hardcore, thorough and well-planned than previous mano dura crackdowns. Part of the reason is that El Salvador is super small. Part of the reason is that Salvadoran gangs were both more deeply hated and much weaker than the average cartel.
I suspect it *is* that simple, especially thanks to new technology available to the police these days such as being able to run 24/7 surveillance of every public street in the city with facial recognition and using that to track down criminals. But it requires capable execution and suspension of habeas corpus. Usually countries are either capable executors (Norway, Netherlands), enforce habeas corpus (US, Mexico) or have low violent crime levels (China, Japan)
I wouldn't really classify Bukele as "right wing" (and so I wouldn't assume that "left leaning" people will be critical of him). He seems to represent a phenomenon kind of orthogonal to the left-right spectrum. As the linked article notes, his roots are in the postcommunist FMLN, though he broke with them later.
I grew up with guys like that and it's probably more like 5% than 1%. But maybe the 1% would scare the remainder enough to do the job.
I honestly wonder if it all came down to the terrible decision of Salvadoran gangs to give themselves lots of gang tattoos. The cases I read about of wrongly detained people in El Salvadore are usually reformed gangsters who still have the damn tattoos.
Yes, why do gangs think it is a good idea to have gang tatoos?
I remember when I read "The Hardy Boys among Pirates" in my early youth, where Frank and Joe were able to identify pirate members left, right and center in US cities because they all had the same pirate tattoos. Even then (I was about 12) I though that was a lame plot device in a book: Surely no real gang of gangsters would be so stupid as to make their members identifiable to outsiders by merely looking at them.
But here we are, in the 2020s, observing that life is imitating not even art, but run-of-the-mill young-adult mass-produced fiction.
As far as I know no one else has done the thing of locking people up for having gang tattoos (or other gang identifiers). E.g. bikie gangs in developed countries can ride around proudly wearing their colours and they don't get arrested for it. Yes, it shows the cops who the criminals are but that's no great mystery.
If it was routine for gang tattoos to get you arrested people would stop getting them. The fact that El Salvador went from not arresting tatted up blokes to suddenly arresting them all caught the gangs out.
> Yes, why do gangs think it is a good idea to have gang tatoos?
It locks members in. Having one signals to your peers that you're committed to the gang. The harder to hide (eg on your face), the stronger the signal.
Good point. It is stronger than "ordinary" signalling; it is bordering on self-binding. That is, a particularly strong/costly way to signal credible committment (here: to a gang).
Presumably this also keeps outsiders out. An undercover cop, or a member of a rival gang, isn't going to get head to toe tattoos for your gang. And as Olivier says above, it means you can't switch gangs or abandon gang life easily.
I suppose the gang was gambling that infiltration and defection was more dangerous than systemic persecution. Turned out to be a bad bet.
because people aren't always rational actors?
If the Yakuza game series has taught me anything, the answer is: because it's incredibly cool to reveal them in full by taking off your shirt and remaining bare-backed while readying yourself for one last desperate knuckle fight to settle a score once and for all.
People do things simply because it's cool? Hmm...exotic thought ..I'll have to think more about that...
I don't subscribe to Yglesias, but I'm going to go out on a limb and say this is a lot easier when the criminals are covered, head-to-toe, in tattoos which identify them as members of murderous gangs? Doesn't seem like rocket science.
Salvadorean-American here. I regret to inform the world that one of the main reasons why Bukele succeeded is because most of the gang leaders in the country tattooed their faces. And the rank and file gang members heavily tattooed all over their bodies.
Since removing tattoos is expensive, the gangs are screwed for the time being. But I have no doubt that every year, gangs are inducting new members who have been instructed to ease off on the tattoos. Over time, it will become harder and harder to identify gang members.
I don't want to pour cold water on Bukele's success at reducing crime. One can only wonder why previous presidents didn't start rounding up these gang members who were making little effort to hide their identity.
Basically it worked because, unlike in a lot of other places, the people of El Salvador really, really hated the gangs and wanted them to go away. This kind of thing doesn't work if you don't have massive popular support.
Duterte too please! I know he's out of office now but everyone made a big deal about how horrible his war on drugs was and then they shut up about it, which makes me suspect he might have succeeded.
I've always been fond of saying that the war on drugs has not been tried and found wanting, it's been found difficult and left untried. The Philippines tried a real war on drugs, and I'm interested in knowing how it turned out.
> I know he's out of office now but everyone made a big deal about how horrible his war on drugs was and then they shut up about it, which makes me suspect he might have succeeded.
Could just as easily be that it went average-badly and the media/their audience just didn't care enough to follow up. Would be interesting to see hard facts either way.
That's my naive impression. If it went really well I would expect someone to report that, and the left-aligned media to fight that impression. If it went poorly I would just expect the media to report that as well, given how much they reported on his actions previously.
The most likely result is therefore mixed and muddied to the point that there's nothing interesting to say and no clear narrative to push.
I'm in PI right now, and my read on it is that Duterte's war on drugs was used more for executing people that various politicians or police didn't like (because they had free reign to execute anyone, and throw a baggie of drugs on the corpse to justify it), rather than an actually effective tactic for reducing drug use.
12-30k people were estimated to be killed, the overwhelming majority of which were extremely poor, small-scale users, with not a single major prosecution or death of a major drug lord. The Philippines DEA says that drug use and sales weren't really affected.
Still, it was moderately popular in the middle classes, because it didn't really affect them and being "tough on crime" is usually popular, especially in relatively high crime places like Manila.
I heard Mao's war on opium worked...
If in order to succeed a war on drugs needs to be so tough that it gets to the point of killing scores of people it's entirely reasonable to ask what exactly about the goal of not having people using drugs is worth that price.
>First, the 25% number was just one really bad month. Inflation had been at a baseline of about 4% for most of the last five years
That doesn't seem like the most accurate description. The current MoM inflation rate of 4.2% isn't typical of recent years - it's lower than any month since January 2022.
And inflation wasn't holding steady at around 4 before inexplicably jumping to 25. It was generally rising over the last several years, before suddenly reversing its trend.
Looking at annual inflation makes the upwards trend a little clearer:
2020: 42.0%
2021: 48.4%
2022: 94.8%
2023: 211.4%
[Looking further back, inflation has generally been on the rise in Argentina since about 2009, (with some exceptions, like a moderate spike in 2019), making the current drop in inflation that much more notable.]
(Sources for figures: https://tradingeconomics.com/argentina/inflation-rate-mom, https://www.worlddata.info/america/argentina/inflation-rates.php, https://efe.com/en/economy/2024-01-11/argentina-closes-2023-with-skyrocketing-inflation-unseen-in-34-years/).
You also somewhat contradict yourself, by presenting the drop in inflation as a trivial return to norm, while also writing: "I think he gets credit for ... decreasing inflation."
A legitimate complaint about the Millei government is that it did not let its currency float freely. The effect of that is to stretch out a long devaluation. Devaluations have inflationary effects, but it was already built in due to prior money printing. The problem is that devaluation makes debt service harder, so they worked in a slow devaluation.Maybe this is the best that could have happened, but it makes some of the inflation effectively Millei’s fault.
AFAIUI that's a compromise he had to make with other parties. However, devaluation doesn't really make debt service harder when it's really about bringing the official rate closer to the black market rate: for debt denominated in Argentine pesos it makes it easier; while for debt denominated in hard currency it makes it formally makes a given amount of hard currency cost more pesos, but at the same time the government implicitly loses money whenever it converts pesos to hard currency at a "better" rate than the black market (i.e. market-clearing) rate, which gets gradually eliminated.
he brought in Luis Caputo as Minister of Economy, the man who took all the debt during Macri's government and crashed the economy in 2019. He's doing the same he did back in 2015: spending all resources subsidizing US Dollars to keep the peso artificially strong while paying 4% A MONTH in peso denominated rate, an obviously criminal carry trade scheme designed to fleece the country once again.
Let me repeat that, he brought the same people that already failed in 2015 to do the same scheme, again.
This post lacks the most critical issue in Argentina: the current account deficit. As long as our brothers in Argentina can't fix their current account deficit, they'll be forever plagued with deficit and having to resort to the IMF.
A quick Google by me shows that president Milei has turned a current account balanced in both Q1 and Q2. I don't know how long he can do that, or what are the caveats. But I'd spend like 80% of the discussion about Argentina discussing the current account deficit.
Wasn't that part 1 of the post?
No, part 1 was about the national budget. The current account represents the imports, exports and other international transactions. Argentina's problem IS NOT having a national budget deficit (every country does), the problem is the lack of USDs because the current account is highly negative.
The destruction of the industry, education and science that Milei is doing is sentencing the country to continue exporting only primary agricultural products and having a negative balance for decades to come. It's the same that happened from 1976 to the big crisis of 2001, with 25 years of neoliberalism, and the same that Macri did between 2015 and 2019.
What would you consider to be the long term differences between his plan and the former trajectory?
Full disclosure, I see that rate of inflation to be unsustainable and that the previous track was not going to lead to a good result. Whether his plan will result in a good result is a separate question. Do you think the previous trajectory would have resulted in a good result, absent Milei?
What do you mean by previous trajectory? I consider that Argentina is on the trajectory that Macri started in 2015. He did exactly the same as Milei, with a huge devaluation and large austerity measures. They are pretty much the same, right-wing neoliberal clowns with the mission of redistributing wealth as much as possible to the wealthy. He started a process of deindustrialization, also did big cuts in education, science, and health (which were very harmful, just before the pandemic). He took the largest debt ever granted by the FMI, US$56.3 billion, conditioning the country's economic policies to this organization once again. And all of this while making inflation go from 31.4% per year in 2016 to 53.8% when he left office in 2019, and poverty from 31,4% to 35,5% (probably increased more, due to methodological issues).
After him, Alberto Fernandez could not do much, with the pandemic, the pressures of the IMF (and interest payments on the debt), the internal fights within Peronism, the international situation (war in Ukraine, etc.), and one of the biggest droughts that affected foreign currency earnings from exports.
So, you have to see the trajectory before Macri. Argentina had a big crisis in 2001 after 25 years of neoliberalism (with economic policies really similar to Macri's and Milei's ones. In fact, Menem was the president during all the 90s and Milei unveiled a bust of him this year in the Casa Rosada calling him "the best President of the last 40 years at least" lol). It ended up causing 62% of poverty and 20% of unemployment. It was really bad. Argentina still suffers from the inequality and social chaos that resulted from this. In 2003 Néstor Kirchner a center-left peronist took office and the country had a decade of growth, industrialization, repatriation of scientists, redistribution to the lower sectors. Obviously there were some problems, inflation was starting to be worrisome by 2015 and the extreme right won elections.
Milei's false discourse is that Argentina's problem is the fiscal deficit. It is a very convincing discourse, because it's very easy to convince ignorant people that overspending is bad. But Argentina has already had dozens of stabilization and economic shock plans, you can guess that they never worked. Again, you only need to look at what happened with Macri recently. Obviously, having orderly and reasonable public accounts and keeping money printing under control is necessary. But completely cutting public works, destroying domestic consumption, totally slowing down the economy and causing social chaos is not the way to go. I believe that a trajectory more similar to that of Nestor Kirchner would undoubtedly be much better. Argentina needs to improve its international trade balance, generate exports with higher added value and stop selling only soybeans. You cannot do that by destroying industry and education.
What’s your take on Argentina’s political and economic situation? I would love a neutral, non-biased opinion. It would be great if you could back it up with historical knowledge. I’m willing to change my mind.
Ah. At least with a free-floating currency, I'd consider the current account (incoming money minus outflowing money) of the country as just the combination of the current accounts of private individuals and companies/organizations, and the government, as measured in hard currency. The government's "current account" is equivalent to its surplus/deficit, while private entities' "current accounts" are their own business.
Currency control shenanigans complicate this, but AFAIUI Milei is moving the official rate closer to the black market rate (i.e. what the free-floating rate would be).
Milei is moving the official rate closer to the black market rate (i.e. what the free-floating rate would be) <--- He is intervening in the foreign exchange market delapidating the dollars from the international reserves to keep the black market rate low. He knows that the moment the price of the black market dollar goes up, inflation is going to skyrocket again, and is doing everything possible to prevent this. Preferably until next year's legislative elections.
You're exactly right about the current account being the most important thing for Argentina's economy by far. It's crazy that there is no mention at all of this in the post. 2024 is expected to have a record surplus, but sadly that's not for good reasons: it's because there was an unusual drop in imports. The recession and the extreme Milei's devaluation reduced demand for imported goods and impacted foreign trade results by making imports more expensive (and also there were postponements of import payments). The only positive thing is that exports grew by 9.8% compared to the very bad previous year (there was a very big drought which severely decreased exports of agricultural products).
You can't just leave out that there's capital controls that don't allow companies to just pay for imports, they have to be approved and the government just isn't approving anything. In practice, Milei's government is exactly the opposite of what he preaches.
Yeah, that's what I refered to with the "postponements of import payments". Of course he is the opposite of what he preaches. It's surprising seeing comments in this post saying that he is doing what he promised! His more important promises were:
1) Fiscal surplus paid by "la casta" (politicians and people of power). First of all, even if you think that the national budget needed to be reordered (which it probably did!) he really overextended with his cuts and is causing incredible harm to the economy and specially to the most vulnerable sectors. But even then, pretty much all the cut are being made to pensions (it represents like 65% of the cut). Retirees are below the poverty line for the first time. Milei vetoed a law to increase their retirement and in peaceful demonstrations old people were brutally repressed by the police.
So... no, it's not being paid by "la casta" at all. In fact, he had the opportunity to remove special tax benefits to judges (who don't pay the "Ganancias" tax) and to keep the Bienes Personales tax (the only important tax he cut, and is the most progressive one, paid by only the 3% richest), but he obviously didn't. On the contrary, he imposed the Ganancias tax back (it's a pretty harsh income tax) when it was removed by the previous administration! In other words, there isn't a budget cut paid by the rich and powerful, it's just redistribution of wealth from the least to the most wealthy as usual.
2) Dollarize the economy.
He will not do this.
3) Close the Central Bank.
He will not do this.
4) Deregulate the economy, including the exchange rate controls.
He is now literally saying that "economic growth is possible with the exchange rate controls" and that "it's not urgent to remove them".
5) Not negotiate under any circumstances with communist governments.
You can't make this up... he recently literally said on prime television that “China is a very interesting trading partner". He needs their dollars and will do whatever China asks him to.
well put
Finally a concise and useful summary on Milei's record ... thanks.
>Remember, the United States very briefly had 8% yearly inflation after COVID and people were livid
Actually, the USA had yearly inflation of (just over) 9% in June 2022. I also wouldn't call it "very brief;" rounding to the nearest percent, US inflation was at least 8% from Jan 2022 to October 2022.
brief compared to Argentinian inflation, certainly :)
That's less than a year. I think "brief" is an appropriate adjective.
That's quite brief in the history of a nation of adults. Sadly the US has been a society of dueling tantrums for a couple decades now.
Part 3, why the sources contradict:
Bottom graph uses a different time axis. When you rescale, you can see its data closely matches the YoY economic activity of the top graph (it seems to say the opposite because you focused on MoM analysis).
So it's basically the same error/statistical lie you mentioned at the end of part 2.
It concerns me hat after 10 minutes of google, I can neither find the original report that gives the 195% housing supply number, nor any evidence of the actual institute it reportedly comes from.
As far as I can tell, everyone is just repeating one viral Newsweek article that said this:
>the supply of rental housing in Buenos Aires has jumped by 195.23%, according to the Statistical Observatory of the Real Estate Market of the Real Estate College (CI).
But I can't find an institution that is called The Real Estate College (CI), I can't find the original source saying that, and I can't find any description of how they are measuring 'the supply of rental housing'.
Of course I don't speak the language and have no context so I might be missing something that's very obvious and apparent to people who do. But ussually when I see a stat repeated endlessly like this, I'm able to eventually track down the original source and evaluate it.
As it stands, I'm pretty skeptical of this until I know who is reporting this, and what operational definition and methods they are using. The naive interpretation is that developers tripled the number of residential buildings in the country in a matter of months, in the middle of a recession, which seems obviously absurd. I'm sure it instead is measuring some other thing that makes more sense, but I have no idea what that thing is!
(I'm a little worried it's also an artifact of that one month of hyper-inflation, like landlords briefly stopped advertising vacancies when there was sudden 25% monthly inflation and everyone was panicking, then put them back when that stopped, and the supply now is the same as it was 6 months ago but 3x what it was during that one month)
Can anyone find the original source on this number?
Here's the website of the Observatorio Estadístico del Colegio Unico de Corredores Inmobiliarios de la Ciudad Autónoma de Buenos Aires (that's a mouthful):
http://colegioinmobiliario.org.ar/noticia/1537/observatorio-y-estadisticas-del-sector-inmobiliario.asp
The report that mentions the 195.23% figure is the one for July:
https://mcusercontent.com/ad066e6e67209065d14118f1f/files/cf8ec2ce-a82b-0076-5689-477411474be5/Informe_Julio_2024.pdf
Thank you!
So it looks like it is measuring the number of... listings? Offerings? Contracts? Google translate says 'THE OFFER FOR RENT INCREASED BY 195.23%.', still not 100% sure how that is measured, this report doesn't give any methodology that I could find by copypasting to a translator (but let me know if I missed it!).
So not measuring an increase in the housing supply necessarily, which is the big thing everyone cares about. More listings is definitely good, but I feel like there's a difference between 'there is more housing for people to live in' vs 'more housing is being advertised'. For example, I *think* a lot of people all swapping apartments with each other would cause this, without any more people in homes?
But, anyway... this figure is compared to 12-29-2023. Not only is this the end of the fiscal year and whatever other seasonal effects, it's also in the middle of that gigantic 25% spike in inflation. The figure of 40% rental price drops also seems to be compared to that period of gigantic inflation.
So I don't especially doubt that things are better than they were on 12/29/2023, but... how do they compare to one year previously, when inflation was at a similar rate and it was the same season?
I'm sort of cynically assuming that this report would have given that number as the natural comparison, unless this number was better for an argument they're trying to make. Of course he also came into power around this time, so 'Before and after he came into power' or 'before and after the worst of the crisis' are both meaningful reasons they might use this measure too.
But right now I can't tell if this is a specific benefit of housing policy and better than it was last year at this time, or just a return to baseline after a crisis/the holidays/etc.
"More housing is being advertised" is the same thing as "more housing for people to live in." Obviously swapping apartments would be absurd and is not happening.
If there are 100,000 apartments, and 80,000 of them are currently being lived in, 5,000 are currently advertised, and 15,000 currently kept vacant, then listing 10,000 more of the currently kept vacant ones results in a 200% increase of listings, but at most a 12.5% increase in actual housing for people to live in.
Obviously, people switching houses is much less absurd than an actual tripling of housing.
I get the feeling that the disagreement is from differences in philosophy, possibly a left vs right difference. People who criticize regulations (eg, rent control) on landlords often do so because they induce would-be landlords to either not rent their properties or to stop doing so, thereby reducing the housing supply. If a politician does away with such regulations, more rental housing is available because more people opt into becoming or staying a landlord, which is reflected in more housing being advertised. So I can see why he's saying that they're the same thing.
It's not only vacant apartments. At least where I live, people often do renovations to divide their house to rent out a part of it, and regulations that seek to put the thumb on the scale in favour of renters because of inequities or power imbalances or whatever leftie buzzwords mean fewer people bother, resulting in less housing.
Obviously no one thought the number of houses in Argentina tripled, I don't know why you would even bring that up.
I thought that was what Scott thought was weird and implausible, and also what the number was trying to suggest.
I mean, the housing supply going up, not the available housing supply going up. IE, more housing being built.
A few other commenters have mentioned that the number of listing changes a lot seasonally, so if it's just that and not actually more housing to house more people, that seems relevant but a lot less impressive.
Yes, I agree that tripling the number of houses available to rent is less impressive than tripling the number of houses!
THANK YOU FOR THIS. Yes, as usual there is no fact checking in Argentine media. The data supposedly comes from rental sites own reporting, like www.zonaprop.com.ar with no checking whatsoever. They actually do this all the time, quoting private companies' numbers without ever checking.
I just wanted to comment that "Real Estate College" seems like the punchline to a Dad joke of some kind.
I know, I know, different languages/countries have similar names that may not capture the nature of the institutions (cf "public vs private school" in UK vs US), but it's still funny to me.
A Milei re-election market was missing on Manifold, so I made one: https://manifold.markets/CKLorentzen/will-javier-milei-be-reelected
Is it missing? What about the one I ended this post with?
Ummm, good point? I mean, that was the reason I searched for it in Manifold, where I found nothing, and proceeded to assume what I’d seen here must have been somewhere else. Ah well, nevertheless.
So, uh, arbitrage opportunity I guess.
My market is being cancelled as soon as the mods get around to it so no point in anyone betting there.
>But Argentina’s economy has definitely gotten worse
> He promised to do shock therapy that would short-term plunge Argentina into a recession
The factor isn't just change, but rate of change. Argentina was already in a recession in 2023, before Milei.
"So a devious liar could say that “inflation” (meaning yearly inflation, which is admittedly the standard measurement) is “unprecedentedly bad” during Milei’s administration."
I think that it's misleading to argue that Milei's administration is uniquely bad on the issue of inflation.
That being said, there's an aspect to inflation that I think people can lose sight of when discussing it in a political context.
What we're talking about with Milei here is, specifically, *rate* of inflation. And there is certainly value in lowering *the rate* of inflation.
But we shouldn't lose sight of how this doesn't necessarily change a certain core "on the ground" reality. Lowering the rate of inflation is not the same as lowering prices. In fact, prices often continue to grow even as the rate of inflation is lowered. And I think for most people, when they complain about inflation, what's really drawing their concern is not the current value of the currency *per se* but rather the impact that inflation has on the price of goods and services, particularly essentials like food and clothes and gas and utilities.
I have some relatives that were a bit annoyed at hearing the media talk about how great we're doing on inflation in recent months. Why were they annoyed? Because the prices of food and gas haven't lowered, in many cases they haven't even stablized. For middle class and lower class people, *this* is what concerns them most when it comes to inflation. I explained to my relatives that the media was likely talking about the rate of inflation, but as was pointed out to me, that doesn't change the negative impact of recent inflation that's already been baked into the cake as well as the price of the cake.
So the people saying that inflation is "unprecedently bad" under the Milel government... they might be intentionally misleading people, yes. But they also might be just average Joes or Janes that look at the prices of goods and services and noticing that they're worse than ever and *this* is what they mentally associate with "inflation".
What do you mean by "inflation"? It seems to be something different than what I perceive to be the standard definition, 'the rate of change of prices'.
That is of course the standard definition. What happens is that the rate at which prices increase has indeed gone down, but prices keep going up and wages are stagnant, so of course people have reasons to be unhappy. (I guess the rate at which they keep getting unhappier should go down?)
Wages are not stagnant, or it wouldn't be inflation.
Inflation is never perfectly uniform across all prices. Usually some are stagnant, and a few are even decreasing, even as many others go up. Some wages likely are stagnant, even as other wages are keeping up with the prices of goods or even briefly getting ahead.
Sure. But more relevantly, wages are not stagnant.
I think you might be one of today's lucky 10,000:
https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/
I guess you are agreeing with me, since your link shows wages and prices increasing equally (wages of course being a price for your employer)?
That's not how inflation works. If wages kept up perfectly with inflation inflation, inflation would be a much lesser problem.
That's exactly how inflation works. I challenge you to show me any inflationary period without substantial wage growth. Stagnant wages are not compatible with substantial inflation.
Wages tend to be stickier than other prices - they catch up, but not right away.
There's also the thing that "the rate" economics usually look at is the yearly rate, but maybe laymen look at some other time period or something rather different. Like personally, I tend to have the prices I learned in my childhood and early adulthood in the back of my mind when I go shopping, rather than last year's prices.
This is the definition I was going with - "a general increase in prices and fall in the purchasing value of money." So I didn't think that the term "rate of" was included in the definition of "inflation" itself. If I was wrong here, my apologies.
I think if we want to get a number from that definition, we have to answer the question "compared to what?". If we answer with "one year earlier", we get the standard measure of inflation as reported on the news or whatever, the rate of change per year.
It would be valid to say that prices are unprecedentedly high under Milei—but prices are unprecedentedly high pretty much all the time everywhere (and in Argentina noticeably so all the time), so that's not particularly noteworthy. Deflation is rare and intentionally avoided by monetary planners.
The 195% growth in rental properties sounds pretty plausible if read as "195% growth in listings of properties for rent vs last year". Probably it is listings for rent, not total being rented. In my experience even in locations not going through macroeconomic shock reform to have like order of 30% cyclical increase in listings, say, over the holiday period it will be much lower, and around the start of the school year in college towns it can be much higher.
Yeah, it seems extremely plausible to me that you could get a big jump in the number of properties being listed for rent just by repealing some bad policy that made renting unviable for most property owners. Besides anything else, if you have an unusually low number to start with it doesn't take a big increase in absolute terms to generate some eye-popping percentage figures.
Thanks for your data-based, genuinely open-minded inquiry.
Your post confirms I have entered a right wing bubble, as I had not seen any dismissals of Milei. Bubbles are not good. I wish social media would not tailor what I see; I want a more random experience. Suggestions, readers? I deliberately follow independent thinkers with other views, yet still, I am being steered.
I dropped my WaPo, NYT and finally WSJ subscriptions last year in disgust at what is intentionally omitted. Even mildly rewarding that with $1/week grates in the craw.
Fox, an unexpectedly balanced source though odious in tone, seems to have also been taken over by pod people. My news is now from X, a few supported Substacks and the tawdry yet legitimate NYPost.
Well, I wish Milei and the people of Argentina success. We have good friends who run a respected science institute in Chile, one Chilean and one originally Swiss. They gave me a positive view of Pinochet, who was described in my college days as a person who cut off the hands of a beloved leftist guitarist. Our friends say refugees from Venezuela have been a problem. It is up and down in Chile.
What I appreciate about anecdotal observations is that, even if fairly dismissed as not representative, they are direct, hence a glimmer of truth.
Read Jared diamond's book Upheaval for the chapter about Pinochet. He did a lot worse than that to the guitarist. And untold thousands of other people. That chapter of the book is literally nauseating and Diamond doesn't even go into full detail. Whatever good things they told you about Pinochet can't possibly outweigh his atrocities.
Agreed. One peculiarity of Chile is the existence of well-educated, well-dressed people who are far to the *right* of the population, to the point of being apologists for the Pinochet regime. This can disconcert foreigners. It may be much less common now than 20 or 30 years ago. I am not asking for ideological uniformity from academia - it's more that people from abroad who suddenly question their views of the Pinochet regime because they meet well-spoken fascism in a suit are used to a fair measure of ideological uniformity, or at least to a total absence of the far right in their own circle of acquaintances.
Maybe these people are simply able to imagine a person or a regime that has both good and bad (even very bad) qualities?
Or maybe they have the moral clarity to know that no amount of apologia can justify Pinochet. I have zero connection to chile and knew nothing about its history until I read that book so I had no preconceived notions. If even a quarter of what Diamond wrote is true there is no possible way to justify it. The economy may have been bad, Communism may have been bad, etc. But there was no reason for what he did other than pure sadism.
The former dictator of South Korea, Park Chung Hee, was one of the most highly rated South Korean presidents as of 2021 and is incredibly popular *especially* among those who lived during his reign. It's the young, those who do not have firsthand experience with life before/during/after him, who dislike him most. It seems to me that democracy and human rights are luxury beliefs, not ones that indicate moral superiority. Similarly, that you have zero connection to Chile isn't a sign that your judgment is more enlightened; it just means you've had zero skin in the game, much like younger lefties who have the "correct" views on such historical figures.
I live in Chile. A friend's housekeeper had her sister "disappeared" by the Pinochet regime, as her sister was a housekeeper to someone in the Allende government. This woman speaks very highly of Pinochet with a "the atrocities are bad, but look at how much the country improved."
I'm not necessarily agreeing with her, but if someone whose family members were killed by Pinochet can praise him, I don't think we can say the good things "can't possibly outweigh his atrocities."
Your friend's housekeeper is insane and I would be insulted if a family member spoke this way after my disappearance (presuming I was still alive or otherwise conscious).
This lack of loyalty is especially mind-boggling in a Latin American context. I suspect your friend's housekeeper hated her sister or something.
I mean, I was absolutely astonished.
Due to the relationship, it was hard to pry too much about exactly why she believed what she believed. But I think my most generous interpretation is: "previously, our family was so poor that family members died very frequently, and now the country is richer, they don't. It was awful to disappear people, but I am also grateful that my nieces and nephews reliably survive childhood"
I wonder if this isn't a natural defense mechanism for grieving people. Liberia famously had a politician who ran on a campaign slogan that was something like, "He ate my pa, he ate my ma, but I'm voting for him."
Maybe when you lose a family member like that, it makes it easier to think that your family member was killed for the greater good. Maybe that gives meaning to a death that would otherwise seem senseless. This might be why the Apache tribe, after being pacified/conquered by the United States government, quickly became extremely patriotic. In the early eighties, Independence Day was a massive celebration on the Apache reservation. I don't know how much that holds true today
Scholar's Stage made a similar observation about Xi, once.
https://scholars-stage.org/a-note-on-historical-nihilism/
> Xi Jinping is well aware of this. Xi was himself a target of the revolution. His sister died in it; he, his parents, and his other siblings were exiled, imprisoned, or tortured because of it. Through war and will, Xi’s father had climbed the Communist hierarchy. He knew the grand and bloody heights of Zhongnanhai. He brought his family to perch there with him. Though young, Xi would have personally known many of the country’s most prominent Communist leaders when the tumult began. He would have attended school with their children. He would have watched as these ‘heroes’ were killed off by zealous Red Guards. He would have seen them thrown from their heights one by one until he was thrown down himself.
> How does Chairman Xi make sense of these things? I often ponder this question. Xi Jinping is a man who watched the Communist Party cannibalize itself. He watched this up close. He suffered tremendous grief and pain because of it. And yet from the age of 17 forward he devoted his life to it. He has done more than defend Party: he has personally moved to punish historians and researchers who chronicle its past—a past he lived through. Those historians who research the atrocities of the Mao years are accused of “engaging in historical nihilism.”
you have a strange definition of insane- reactions like this are pretty common all over the world.
Lots of people who were sent to labor camps by Stalin (and in some cases under pending death sentences) and then were released in the mid 1950s after he died still loved him after they came out.
and then there's the famous case of that Iraqi guy who cheered in 2003 when Saddam Hussein was overthrown, because "he executed 20 of my relatives", and then a few years later after the beauties of the US occupation had made themselves apparent, said "i wish we had Saddam back".
Tens of millions people suffer from schizophrenia. That doesn't make the symptoms of schizophrenia any less disturbing.
I talked to an Iranian woman once whose sister had disappeared into prison and never come out again. She was sad about it, but shrugged: “she was political.”
It really struck me how fatalistic she was about it, as if her sister had gone hiking in bear country and been eaten by a bear. What can you do? She was political.
Fatalism is kinda normal -- it's WIERD not to be fatalistic.
If I lived in Iran I'm sure that would be my reaction too. Fatalism is absolutely normal- so is political repression.
(Fumes in Eighties about Thatcher trying to get Pinochet off the hook).
'Whatever good things they told you about Pinochet can't possibly outweigh his atrocities.'
This is a ridiculous view.
I'm sure he made the trains run on time. No but seriously, how did this comment thread turn into apologia for evil dictators? Am I still on the same blog or did I somehow get redirected to an alternate website?
Anyways, Pinochet wasn't even that good for the economy and he embezzled a ton. He undid the incredibly stupid economic policies of his predecessor so yes that helped the economy, but he could have done that without torturing anyone. Yes, some dictatorships are more ambiguous, but I didn't think this was a particularly difficult case to judge. Are you trying to argue that it's impossible to commit inexcusable atrocities as long as there is economic growth under the regime?
What are your views on Deng Xiaopeng? I think he's one of the greatest men to ever have lived. You can also bet your ass he/his regime committed plenty of atrocities. Could he have done the greatness without the atrocities? How the hell do you know?
News suggestion: I read El País and find it reasonable, YMMV. There is a US edition (that I don't read), but you might give it a go: https://english.elpais.com/
As for Pinochet: I would recommend reading The Pinochet File, a book based on declassified US government records. It is illuminating, and it might also be a good choice for "Dictator Book Club", though I'm not sure Scott wants to read more complaints complaining about who he calls a dictator. :)
El País is basically in the pocket of the Spanish socialist (and currently governing) party (PSOE) and will publish no bad word against them. Has a pretty clear left-wing skew
Yes, the request Alice K. made was for suggestions on other views to break out of a right-wing bubble, so I recommended a news source with a left-wing skew. If I've misinterpreted the request, apologies to Alice.
Oh, I thought she wanted neutral sources. I believe there is no shortage of left-wing skew around and they are easy enough to find, no? (NYT, Washington Post, the Atlantic, LA Times, NPR, etc etc)
Though perhaps slightly left of centre, the BBC is, to my mind, a reasonably neutral source of international news.
I agree that BBC World news is a better option for a more neutral source.
I really feel recommendations of books on the Pinochet years should come with something like a trigger warning valid even for people who do not believe in trigger warnings and are sick of trigger warnings. There are torturers in the world, but those folks in Chile weren't normal.
Much the same went on in Argentina - in fact the two regimes shared techniques, prisoners and so forth. Argentina may be talked about less because it's a more black-and-gray story, where the gray side (to the extent that it was gray) consisted in young idiots who went around with semiautomatic weapons even before any glimmer of democracy disappeared. (Also, Argentinian politics are particularly illegible due to the third axis - there's economics, there's authoritarianism, and there's Peronism.)
The Argentine regime probably executed about 10x more people, is my understanding. And was much more seriously ideologically right wing as well.
The Argentinian regime killed more people, in part because Argentina is a bigger country (well, at least in one out of three dimensions). However, 10x is very unlikely to be correct; you would get this if you divide two numbers obtained by two very different methodologies - one is a guesstimate given at the time (independently by two sources: human-rights advocates who were really just trying to guess something plausible but impressive, and people inside the dictatorship who were claiming credit for how many "enemies" they had killed) and the other one is a figure of people with first and last names whose corpses were found and identified, rounded down (if you were definitely kidnapped by the regime and thrown in the sea, you count legally as 'disappeared').
The estimates for Argentina are in the 9000-30000 range. I heard Chile had about 400k exiles, but have no idea of how many people were actually killed.
oh that might well be true. I vaguely remember seeing numbers of 30k for Argentina and 3k for Chile bandied about, but you might be right that one is a high estimate and the other a low one.
I met an older Argentine guy in Buenos Aires who truly hated and despised the current regime c. 2013. Stupid, lazy, indulgent of criminals, corrupt, etc. But when I asked him what he would say about a return of the military, he shuddered. Inconceivable. Anything would be better than that.
> I have entered a right wing bubble ... I want a more random experience. Suggestions, readers?
Maybe read less, watch YouTube more? My YouTube recommendations are full of conspiracy theories and Russian propaganda. Not sure how exactly YouTube decided that this is what I need to watch, but maybe their targeting is not more detailed beyond "this guy sometimes watches videos about politics" and then they just show the most popular videos in that category.
The problem is there is nothing there about Argentine, or basically anything much beyond "top 10 reasons why NATO made Russia attack Ukraine".
when im on youtube, i often see ads for Ground News, which is some sort of news aggregator that highlights bias. Or something like that. Idk much about it. caveat emptor.
I have heard that when Fox News actually presents news, it's not terrible. Their commentators, on the other hand, usually are terrible, and a lot of the airtime on the Fox News channel is commentary and not news.
I believe it is too kind to characterize people who would use 12 month inflation in that way as devious liars. I believe many people are so ideology brained, biased and careless that they are perfectly careful of repeating - and even creating - such a statistic without thinking carefully enough about it to even know if they are telling the truth
In terms of disincentivizing certain behaviors my belief is that being told you actually don't even know if you are saying a true thing is more uncomfortable than being called a liar, and harder to easily dismiss
I'm flabbergasted that you think it's being "kind" to call someone a liar instead of calling someone ignorant. Are you a STEM person? I would ABSOLUTELY rather be ignorant than a liar. Ignorant people can and do educate themselves. The path to reform is long and steep for a liar, especially if their lies are always profitable in the short term, and they are able to lie to themselves about whether they need to be reformed at all.
In the moment it would make me more mad to be called a liar, but it's very common in the online context. Overall I will probably just discount them and disagree harder
Imagine someone says to you, "I'm mad online and going to call you a liar". Now someone says, "I'm not particularly distressed by any moral reflection relating to the accuracy of your claim because it's so wrong it calls into question your ability to know whether you're saying true things at all"
That, I'm going to remember, and respond to. Recently nuclear critic @AukeHoekstra said on X:
"This is typical in my feed: nuclear proponents boasting nuclear is cheaper, without sources, and based on spurious outdated and overly optimistic assumptions.
Please up your game."
This got a big reaction. In fact the 'non-source' of the nuclear proponent was a new DOE report referencing a fairly recent study, and his source was just some guy on twitter saying it was outdated. It was hard to even notice that because he had persuasively framed it as hopeless incompetence
> Ignorant people can and do educate themselves
There's a difference between being ignorant and stupid. Stupidity has no cure.
I think you value competence more highly than most people, so you would prefer to be called a (competent) liar than an incompetent truth-seeker. (EDIT: Yep, in your next comment you express admiration of someone cleverly making a wrong argument you disagree with.)
Most people don't care about truth-seeking at all, so "liar" is basically a synonym for "outgroup" (because they automatically accuse of lying everyone they disagree with), and outgroup is the worst thing that a person could be.
I definitely would never admire the trait of successful self-deception. To be clear if I believed someone was accurately calling me dishonest I would absolutely take it harder than incompetent
What I do think is that they are being honest as far as they are aware. I've seen their comments several times and they appear capable and relatively thoughtful
You'd have to be nuts to intentionally lie to the effect that people you disagree with aren't sourcing their claims when, if anyone actually observes the sources referred to, it turns out your source is a random, snarky, opinion vs the DOE
In this, and many, cases rhetorical competence can easily hurt your genuine competence. If you're good enough you can lie to yourself without having a clue. You repeat the lie in convincing ways because you believe it. Step two is an honest step because your initial mistake was in not exercising the difficult competence to actually consider if what you are saying is actually supported
As a result a person like this is being honest by popular standards - and they will not find it persuasive to be called a liar. They may find it rather devastating if someone reveals to them how clear of a mistake they've made and, imo, correctly attribute it to incompetence
I personally would prefer dealing with a honest person who made a honest mistake than deal with a clever liar that is intentionally deceiving me... but still, I get what you're saying here, and there's some truth to it.
People who use stats/tables badly aren't necessarily doing so in a clever deceiver way, many simply have extremely motivated reasoning and literally only see what they want to see in a stat without thinking more deeply about it.
(Not Argentinian, just a Latin American academic with lots of Argentinian colleagues - last talked to them one week ago)
- One thing to understand about Milei is that he is not just your oh-let's-shock-them-and-end-this-inflationary-period-once-and-for-all-even-if-that-is-a-brutish-remedy-do-you-know-a-better-one? polician. He is very ideological to the point of cultishness - his libertarianism is that of a homegrown clique, and would barely be recognizable as libertarian if seen closely by US libertarians. For instance, it's very anti-abortion.
- The already bad situation in academia has got materially worse under him, but, to my surprise, there is still room for it to get worse (let's hope it won't). (Very concretely: even senior academics get 0 (zero) travel money, so, if you invite an Argentinian, you have to cover every cent - but, on the other hand, there are still positions being opened here and there, and they often stay open, as people are leaving and the remaining candidates often aren't up to the usual standard; Argentinians are now telling strong young Colombians, Peruvians, etc. who self-identify as long-term optimists to please apply.) What has changed majorly under Milei is that he has attacked academics directly and virulently, as a supposedly privileged 'caste', and that that has made a clear difference to how academics are treated: they tell me they've gone from being seen as respected professionals who are having a hard time to being ill-treated while standing in line at the market, or things of the sort.
- The vicepresident managed to get herself known by saying outrageous things that went against the consensus. Some of the things she says are at least half-true (guerillas didn't start with the dictatorship in 1976; sure, some started during the previous dictatorship, before 1973 or during the unstable, illiberal democracy from 1973 to 76 - and certainly didn't make things better). She was also head of a pen-pal club for dictators that killed well over ten thousand people, and had systematic torture policies that will make you lose your appetite for a good long while if you look them up. She presented herself as being a family member of a victim of terrorism. Turns out her dad, uncle and grandpa were military men, linked to crimes against humanity. (She claims there were unsuccessful attempts against her grandpa's life; apparently that's enough to make her into a stigmatized victim, in her own words.) How does that make someone popular? These days, it's enough to get talked about, and to oppose anything that is perceived as a new orthodoxy.
I'd say abortion is more-or-less orthogonal to libertarianism: if you think a fetus is a human in the morally relevant sense, you probably oppose it whether you're a libertarian or not, otherwise you probably don't oppose it whether you're a libertarian or not.
>She was also head of a pen-pal club for dictators that killed well over ten thousand people
Is killing 10000 people the membership criterion of that club (as I first interpreted that sentence), or is it just a club whose members happen to have killed 10000 people?
Generally agree with this. There's nothing inconsistent with advocating a pretty minimal role for the State -- just enforcing laws against violence -- and also seeing abortion as violence.
I'm not accusing him of inconsistency - as he puts it, libertarianism implies respect for another person's life projects, and apparently a blastocyst has life projects. (Or maybe that starts with gastrulation?) It's probably fair to say, nevertheless, that US libertarians default to pro-choice, whereas Argentinian libertarians default to anti-abortion (I don't know whether they have that as part of the definition).
I think you might have an overly rosy view of US libertarians if you mostly read eg GMU bloggers - there are a lot who can only be described as "ideological to the point of cultishness", and many are also pro-life (for example Ron Paul, the most successful libertarian presidential candidate in recent history).
Ron Paul and the paleo-libertarians brought in a right wing element that was very different from the Randian types who founded the party and spread the term "libertarian" to mean a kind of radical classical liberal. But ideological to the point of cultishness not only describes libertarianism in general, it is, so to speak, the point.
Liberty magazine once ran a survey in which it asked readers some question like this: If you fell off a building and then grabbed a pole that let you hang outside the building, suspended in the air, and then the only way you could survive was by kicking in the window of the apartment and entering it in violation of the owner's property rights, would you die or would you kick in the window? Over half the respondents preferred death.
>Is killing 10000 people the membership criterion of that club (as I first interpreted that >sentence), or is it just a club whose members happen to have killed 10000 people?
Good question; you can ask her.
Academia right now IS a socialism promoting caste system that does deserve to be starved of funding, so it sounds like he's doing the world a favour by showing the path, honestly
Why government should pay academia?
Government should be only about border control, defence and law enforcement.
Is Milei also planning to defund the roads, water works, electrical grid, and hospitals? Or does he perhaps recognize a broader concept of "public good" than a hardcore libertarian would?
And if so, perhaps "education" should also be on that list of public goods, as it is on the list of most governments worldwide?
Most education outside STEM is not really a public good although it is enjoyable for those who love it. Historically it was justified by paying low salaries and forcing the profs to educate the young in the basics. On that basis, it seems a legitimate public good. When it becomes Leninist training camp, it is the reverse.
He's a twitter shitposter first and foremost, his views are whatever contrarian opinion gets him attention in a niche he sees available: being anti-abortion was good engagement bait and went against the biggest rallying point for the left in Argentina around 2020. Israel-Palestine issues getting the spotlight? Let's convert to judaism! He's obviously in the spectrum too.
Just to add context on this: "Villaruel has an interesting background: she’s a conservative Catholic activist and amateur historian who writes books arguing that past Argentine right-wing governments have committed fewer atrocities (and past Argentine left-wing governments more atrocities) than generally believed, which has earned her accusations of “denialism”. I don’t understand how this led to her being vice president, or why she’s so popular".
Villarruel, daughter of a genocidal military officer, defends the 1976-1983 dictatorship who literally committed genocide (there were no atrocities by left-wing governments). The dictatorship was right-wing and neoliberal. It killed tens of thousands of civilians with a systematic plan of torture and disappearances. It's the Argentine equivalent of the Holocaust. Villarruel argues that the civilians they killed were "terrorists". This was completely disproved by the historical trials that were made to the military juntas.
She came to power because together with Milei they represent the most rancid of the genocidal extreme right. Driven by the lack of education and the constant narrative of the mass media, people believe that voting for the extreme right is a change.
I doubt that even she claims that there were atrocities by left-wing governments, as there were no left-wing governments (at least not in the 70s, or the 60s or the 80s).
You're playing "no true leftist" there, Peron is classified left-wing by almost everybody including himself.
Peron in his second coming was no leftist; he was a wily politician who played right Peronists against left Peronists for... actually, it's hard to tell for what sort of long-term gain, since he died soon after taking office.
I'll grant that Cámpora was a left-wing Peronist. He was president for 50 days.
Peron isn't nor ever has been classified as left wing by "almost everyone", and certainly not by himself. He did have left wing supporters, as well as broadly right wing supporters- the fact that you had Left Peronists and Right Peronists is itself an indication that where he stood on the left vs. right spectrum is a little unclear.
it's been a while, but when I studied that era back in college the instructor was pretty clear that you could plausibly call him a centrist, or you could plausibly call him a kind of anti-traditionalist man of the right, but you couldn't really call him a man of the left (and when he came back to power, briefly, in the 1970s, it was clear that in the last analysis he would side with the right).
Something important to keep in mind when discussing current inflation -> the Argentinian Peso is still pegged to the dollar with a crawling peg of 2% a month.
When Milei devalued at the beginning of his term, he set the price at 800ars to 1usd, and it rises 2% a month, so we are currently at 1000ars to 1usd.
That likely accounts for half of current inflation (so 4% monthly inflation, 2% "real" and 2% just due to the crawling peg).
The plan is supposedly to let the peso float freely once a few vaguely defined milestones are reached (getting rid of the super-high interest treasury debt ,accumulating dollar reserves, etc).
Your math only makes sense if Argentines only ever bought things for dollars
If a mere 10% of purchases were in dollars then the crawling peg would account for 0.2% of inflation. I don't know the actual number
Two more simplifying but false assumptions: there is no black market for dollars and Argentines always get paid in pesos
EDIT: I forgot to mention that that 4% inflation figure doesn't even account for goods purchased for dollars in the first place. It's just the exchange rate between pesos and stuff
I'm used to the phrase 'poverty rate' being defined in a sufficiently disingenuous and politically-opportunistic way that I don't expect much information to come from changes in it. Is it defined better in Argentine measurements? Or is it possible to get more grounded figures? Maybe 'how many people are missing meals due to inadequate money' or 'how many people are homeless'?
I think the best source to follow Argentina's macro and microeconomics is UFM Reform Watch (https://milei.ufm.edu/es/). It has the best following of most important indicators and many others such as cement usage, railway freight or credit loans to the private sector.
And the best account in Twitter may be Daniel Fernández (in Spanish), which by the way is "disciple" of the quoted Juan Ramón Rallo: https://x.com/danfmsg/status/1840102004091412523
Thanks! I was looking for something like this
I invested a small amount in Argentina immediately after Milei's election, and am adding here. Why?
1) The July upturn is the first time economic activity (the EMEA from indec.gob.ar) has increased month / month since at least 2017. This suggests Argentina's recession is ending. Manifold seems to agree with me, as this market flipped right when July's EMEA was released:
https://manifold.markets/GuyR/will-argentinas-recession-end-by-th
Argentine mid-terms are a year away, so if the economy is already recovering we could have an entire year of growth before then.
2) Inflation has been sticky, but about 1.5% of it has been food and restaurants. Agriculture and agricultural investment have seen big upswings, so hopefully that abates.
3) Another big contributor is power and utilities. The Peronists were absurdly subsidizing electricity. Electrical costs are now (or soon will be) set by a formula applied monthly, which should scale with inflation. So if other inflation comes down, energy inflation will too.
1) July economic activity showed significant improvements (+1.7%), which would indicate that the recession floor has been reached. But the advance data for August and September show that it will decline in the coming months (-0.4% for August), which shows that there is not yet a steady recovery, and that it will take months to recover what has been lost since Milei took office.
2) Inflation remains high mainly due to non-tradables, such as services. And it will remain high, since services increase in price when salaries increase in price, and salaries still have to recover a lot of purchasing power lost since the brutal devaluation of December decided by Milei.
Agriculture had a big upsing because of the historic drought from last years.
3) Practically every country in the world subsidizes energy, transport, etc., it's not a “Peronist” thing.
1) What advanced data are you referring to? Thanks!
2) Agreed, December looks like it was brutal. 25.5% inflation with only 8.9% wage growth. Real wages are thankfully recovering at a decent clip. It's worth noting that their peak through 2023 seems to have been July of that year.
Agreed the drought hurt 2023, but Agriculture was also harmed by past economic policies:
https://www.cargill.com/commodity-price-risk/soybean-stalemate-whats-happening-with-argentinas-crop
3) Argentina's was extraordinarily cheap, about 2.5 U.S. cents per kWh in 2023.
1) There are private stimations like the one from the consulting firm Alphacast, you can check it out here https://youtu.be/e4tGGaEr4GQ?t=1102
2) Agriculture is the only thing that generates dollars, that's why it has always had withholding taxes and policies of that kind. Milei is not removing them either, on the contrary, the current and artificially held extremely low price of the dollar is harming exports severely.
3) In 2015, when Argentina was at the peak of energy subsidies (they dropped considerably since then), they were 3,25% of GDP, similar to Chile (3,32%) and well below other countries in the region like Venezuela, Bolivia and Ecuador. Source: https://chequeado.com/hilando-fino/la-argentina-destina-menos-a-subsidios-energeticos-que-el-promedio-de-latinoamerica/ What data are you checking for this?
1) Thanks! I'll dig in to this.
3) Ah I wasn't aware their neighbors were doing the same. In Florida I pay 12c / kWh, and we almost have more natural gas than we know what to do with. U.S. electricity subsidies are mostly focused on solar, and my guess is the industry is on net taxed.
In any case, electricity subsidies are bad policy.
How did you invest in the Argentinian economy? Did you just buy an index fund listed on a foreign stock exchange or is there a more direct way?
Genuinely asking.
Argentina has ADSes listed on U.S. exchanges. I Mostly bought CAAP and GPRK, with some BMA, SUPV, and GGAL.
CAAP I bought because airports are a fantastic business, and its cheap.
GPRK because it's absurdly cheap, and absent some shock I think oil will be range-bound for quite a while.
My reason for buying the financials was bank intermediation is low in Argentina, so getting inflation under control could boost their business. They also tend to own a lot of government bonds, which go up in value as inflation drops.
I don't think I could find any Argentine government bonds tradable through IBKR at the time.
Cool, thanks!
I’ll be sure to come back to sue you if my investments lose value. 😉
This is from an interview with legendary investor Stanley Druckenmiller in May, quite funny: „I wasn’t at Davos, but I saw [Milei‘s] speech in Davos and it was about 1:00 in the afternoon in my office. I dialed up Perplexity and I said, give me the five most liquid ADRs in Argentina.“ „It gave me enough of a description that I follow the old Soros rule, invest and then investigate. I bought all of them. We did some work on them. I increased my positions and so far, it’s been great. But we’ll see. […]“
(from https://www.cnbc.com/2024/05/07/cnbc-exclusive-cnbc-transcript-billionaire-investor-stanley-druckenmiller-speaks-with-cnbcs-squawk-box-today.html, there‘s more there)
"He may have cut (or at least not increased, which given inflation levels is an effective cut) funding for universities, which now complain they have no electricity and are giving classes in the dark."
There's a solution for Argentinian universities' funding problems: impose a time limit as a requirement for graduation. If studying a five-year degree, you have to graduate in seven (or better yet, six) years at the most. That way the number of concurrent students decreases while the number of graduates stays (approximately) the same. Currently, Argentine students have no incentive to finish their degree quickly (no tuition, no time limit, no cultural pressure to leave parental home).
Are you serious? If you want incentives, what about not destroying the scientific system so people can have an academic career after graduating?
- I assume part of the reason why Argentines who want to continue on an academic career path are discouraged to do so is low salaries. Lowering expenses (and assuming same budget) means Argentinian universities could pay higher salaries.
- If having very little money for conducting research is also part of the reason you talk about destruction of the scientific system, then again lowering expenses means Argentinian universities (or grant giving foundations) will have more funds to grant.
- Most Argentine students want a degree in order to get a job, not an academic career. Assuming a large part of the value of a degree is signaling, shorter careers (not curriculum) would strengthen the signaling value of their degree.
Ok, wait a second. If you want to improve the graduation rate, imposing time limits for graduation is crazy. It will obviously just make people have to quite just before graduating. It's true that Argentina has a graduation rate below other countries in the region such as Brazil and Chile, but this is mainly due to:
1) A lot of university careers in Argentina last between 5 and 6 years, while in other countries they last usually closer to 4 years.
2) The University of Buenos Aires, which concentrates most of the academic offerings of higher education in the country, is the #1 in Latin America. Its level of demand and the length of its courses make it more difficult to graduate, but maintain a high standard pf excellence.
3) Another factor is that in Argentina there are fewer students who are dedicated exclusively to their studies, and there are many who have to work to sustain their studies.
4) University entrance systems in Argentina are totally different from those of other countries in the region. In Argentina there is unrestricted admission and it plays a very important social role. Not graduating does not mean that a person loses their knowledge and that their studies were useless, perhaps a low-income person who was able to access the university and had to drop out can make use of that knowledge in their future work or share it with their community.
What you have to do is to create more universities with shorter degrees, varying the offer and the requirements, and to improve the economic conditions of the population and provide greater assistance so that people can study without having to work. Notice that it's completely the opposite of what you propose.
I didn't mention anything about the graduation rate.
I do agree that Argentina's low graduation rate seems like a problem, but I don't see any relation to the austerity measures taken by Milei's government (if there is a relation I'm interested in hearing what it is).
PS: I do agree on your comment about shorter degrees. I think they are probably a good idea.
You do mention decreasing the number of students while keeping the graduates the same, and a lack of incentives to finish their degrees. I will just share the article I shared with another person below (it's in Spanish, but you can translate it if needed), you can guess if this will have a relation with future low graduation: https://www.revistaanfibia.com/universidades-desmantelamiento-en-cuotas-o-sea-digamos-diego-iglesias/
A low graduation rate is normal (indeed inevitable, humanity being what it is) in an elite institution with essentially open admissions; that happens not just at University of Buenos Aires but (say) at EPFL and ETHZ, or at Sorbonne/Pierre et Marie Curie (well, back when it had open admissions). However, what is more or less standard elsewhere is for half the class to fail or give up after a year or two, not to hang around forever (something that was common in Europe a very long time ago, but surely no longer).
Lots of countries have a fairly fixed deadline for graduation..maybe one extra year, but that's it.
Btw, there is not a "funding problem" for universities. There is a political decision to destroy education and science. Milei is not having any "budget problems" with the armed forces or the police, which form his repressive system. They are having steady salary increases, well above the rest of the sectors. There is also no problem with reducing the personal property tax, which is only paid by the richest 3% of the population. Etc.
>Most Argentine students want a >degree in order to get a job, not >an academic career.
This reads like Pol Pot lite. I'll pass.
Uh, why? Perhaps I misunderstood your point, but this just sounds to me like common sense, in any country. The number of nerds is small. Most people want a diploma to improve their situation on the job market, as a zero-sum game.
If you made it illegal for employers to ask about educational status, most people's opinion on university education would be between "so what's the point?" and "it allows me to spend a few more years without having to get a job". Even the few people who genuinely care about knowledge might start wondering whether it is possible to get the same knowledge more efficiently.
My point was that academic jobs are jobs. It was your dichotomy of jobs versus academic careers that I found distasteful. I have my own critiques of universities, but if you show up to a workplace everyday and get a paycheck every couple of weeks, that qualifies as a job in my book.
In this context I think "job" is the set of all jobs minus academic jobs. I'm not actually sure there is a better way to state this succinctly in English than as was done. The sentence as a whole provided the context necessary to differentiate the two subsets being compared. If we had a previously established word for "jobs other than academic careers" that would fit nicely here, but such a word does not exist as far as I know.
I mean, maybe two things?
The kids who take seven years to get a four-year degree aren't the ones who are going to be having academic careers anyway.
How many scientific careers can Argentina support? My wife is from Chile and lot if her University classmate had to leave Chile to find Jobs that actually required their talents.
Some economies can't support so many degrees.
Don't take it literally. The person to whom I replied clearly follows Milei right-wing narrative that Education and Science are an useless expense. It's ironic that they are giving a mortal wound to higher education and the scientific system, and then say that the solution is to just cut more the budget for the universities setting some random time limits to students.
Clearly my opinion is different. I think that there has to be much a solid budget to universities and a scientific system of excellence so that graduates can work in the country.
Right now university professors in Argentina have literally the worse wages in Latin America. 90% of them with ten years of experience are below the poverty line. Really? The solution is to put time limits to students? Lol...
You can translate and read this article if you want to cry with me: https://www.revistaanfibia.com/universidades-desmantelamiento-en-cuotas-o-sea-digamos-diego-iglesias/
If it were really so useful, it would not need to be subsidized.
Sorry, are you're saying that public services are not useful? I must be missing something.
Public services can be very useful but rarely are. Especially in economies where they have expanded well beyond the scope of what needs to be public, like Argentina. And yes, funding of higher education and 'science' that doesn't produce much beyond post modern critiques of capitalism most definitely fits into stuff that is not useful.
Or better than imposing a limit, require payment if you go over the limit (either per year, or better, per services actually used).
A more serious proposal would be to set up a self-funded system of student loans, where you get taxed x% of your income for N years once you get a job. This *could* work for university graduates who are more likely to work for large companies with a contract, not under the table.
A slightly less serious, more fun and free-market proposal would be a system where people can buy/sell shares of your future income.
Wonderful! Jaunty journalism at its best.
Section 3: The second chart is the same data as the red line (year-over-year) in the first chart, but in bar chart form. It's exactly the same the thing that you were talking about in the previous section.
Where is the 4% monthly inflation still coming from? Is the government still printing lots of money or something weirder going on?
...which is why youll definitely not explain the real mechanism, and only give us a glimpse of whos to blame.
This is a busy week for me, I have no time for casting pearls.
Banned for inflammatory/insulting material without explanation.
>Is the government still printing lots of money?
In a sense, yes. There's a huge stock of local currency debt that's getting rolled over, while interest rates have been decreasing rapidly, they're still at ~40% annual.
There's also the fact that a lot of the drivers for lowering inflation, like allowing more imports, are complicated due to current conditions.
What you’re looking at are official inflation numbers, which are upheld by things like currency controls. In bringing the official exchange rate of Argentine pesos close to the real (black market) rate, there will necessarily be inflation, or even stricter austerity measures than are already implemented. This problem is due to the previous administration artificially keeping the Peso highly valued against the dollar in official exchanges, where the real value devalued dramatically.
Once and if the Peso is allowed to free float against the dollar, then the inflation numbers we see will be a representation of Milei’s policies. Dollarization would bring the Argentine inflation rate in line with the US rate and would also make it harder for subsequent administrations to recklessly overspend.
Are there any inflation numbers adjusted for the black market exchange rate? Seems like a relatively easy thing to account for.
I'm not going to pretend to know exactly what's happening but I expect a lot of it is due to inflation expectations. If everyone expects everyone else to raise their prices so they do too it becomes a self-fulfilling prophecy.
It's one of the problems with inflation - once it sets in it's hard to get rid of. Brazil managed to do it by replacing their currency.
Inflation looks backwards. The biggest part of the inflation rate right now comes from non-transable services. Let's say, a hair cut. The price of these services is highly correlated with wages, and wages and purchasing power are down after Milei's devastating devaluation in december. Slowly, wages have to recover, but when unions demand an increase in their salaries, they are not asking for the current 4% of inflation, they're asking for all the accumulated inflation that eated their purchasing power the previous months too. This creates inertia into wages increasing more than current inflation, then prices from non-transables going up because of this, and these price increases generates more inflation. It will take several months to stabalize.
Hey Scott, is there a way we can translate this view in Spanish? I like the way you objectively break this down in simple terms, and I would like to share with my South American Brethren.
I spent February 2022 in Argentina, and I plan on spending this upcoming December in Argentina again. I will hopefully have a more clear view on the changes that Milei has done in one year of government.
Feed it into ChatGPT or your favorite LLM and ask for a Spanish translation?
I will 100% do that and publish it with Scott's permission
I think as long as you give credit and link back to the source, people will usually not mind you re posting something that is already publicly available for free
Fair assessment. One primary thing I don't see a lot of people giving Milei credit for is that he's doing the more moral thing a politician can do, which is protect more freedoms (economic, mostly) and provide a relatively-honest picture of what he's trying to accomplish and why. He's the only leader speaking publicly against socialism/collectivism AND acting upon it to his best abilities.
America and Americans should be supporting him morally and hope he succeeds!
It cuts both ways, if he’s a failure people will point to his bad example for years to come.
Certainly! If he fails, detractors will say “capitalism” failed, when in fact, Argentina will likely remain a very socialist country even after Milei is term-limited and leaves with even some success.
Scott, if you'd like the original source the 195% claim comes from, it's here: http://colegioinmobiliario.org.ar/noticia/1537/observatorio-y-estadisticas-del-sector-inmobiliario.asp
Newsweek mangled the translation when they called it "Statistical Observatory of the Real Estate Market of the Real Estate College (CI)" so I remember it being a right pain to track down.
>You can debate how many sources are actually trying to con you this way vs. just including the yearly inflation number for “context” or something
It does look like the 195% housing supply increase and ~40% rent decrease are both measured relative to that one month of hyperinflation, as well.
I don't know what those numbers would be if you compared them to 1 year ago during 'normal' inflation, I haven't been able to find the data. But it does make me suspicious that similar statistical obfuscation is happening.
In what sense is the "40% rent decrease" relative to that previous month? Did rents actually decrease by 40% compared to what they were in that month, or is it something like a 40% decrease in the rate of increase?
I'm not totally sure.
It looks to me like everyone reporting these numbers is getting it from this report: https://mcusercontent.com/ad066e6e67209065d14118f1f/files/cf8ec2ce-a82b-0076-5689-477411474be5/Informe_Julio_2024.pdf
I'm just copying stuff from it into google translate, but it seems light on methodology. I don't know if there's a more complete report available, I don't speak the language.
If Milei succeeds, then is it really a victory for libertarianism, or just a victory for middle-of-the-road centrism?
Most of the policies he's put into place look less like instituting a libertarian government and more like unwinding some idiotic left-inspired cruft that any centrist economist will happily tell you was a bad idea in the first place.
This is a good point. But it won't stop Milei diehards from claiming a victory and calling for the abolition of police departments.
The faster we abolish police departments the better TBH. I'd vote for Milei in the US in a heartbeat if he did that and could run.
There can be no true freedom without law and order, only a shallow facsimile of freedom. We need to massively overhaul our police departments to introduce better training and tactics. De-escalation should be emphasized. Police should be trained to remain stoic and impassive in the face of irritating or verbally abusive citizens.
The police must be demilitarized, and to achieve that you probably want to de-emphasize hiring veterans. But at the same time, we have an absolutely glaring shortage of police officers in key counties. Overall, we have half as many police per capita as your average European country, and that's absurd. No wonder we have such a crime problem.
Note that local Republicans and cops are keen on just about every measure to fight crime except for significantly increasing staffing levels. Cops cherish their overtime pay too much to want to see that, and the Republican politicians who cater them never push the issue, since they are childishly obsessed with budget cutting.
Had wrote a long response but I hit delete, we simply fundamentally disagree on the meat here though I will agree (mostly) with your first sentence and last paragraph. On the veteran thing though it's not so much a veteran problem but the sort of veterans they hire, i.e. they need to quit hiring military rejects such as prior junior enlisted, former S/MP's, and anyone that had a direct combatant job. I simply don't believe there is any evidence that shows hiring the forty-five year old former colonel of regimental chow hall lends itself to police abuse against the public. It's not a veteran problem, it's a hiring trained (and actual) killers suffering from PTSD who washed out the military as they couldn't handle it nor get promoted problem. When you hire trash, you get trash.
The only quip I'll make is you are confusing "police" with "law and order" and likewise making the mistake law or order depend on each other. People tend to forget those are two separate concepts. Law and order both long predated the police as we understand them today and the police neither provide law nor order anywhere. I've spent a big portion of my life living in places where effectively the police didn't exist and law and order was maintained just fine via other apparatuses. The free'est I have ever lived in my adult life was two years in war torn Bosnia during the 90's, that was freedom and liberty. I had more freedom in war torn Iraq back in 2005 than I do in America and always dreaded when I got stuck visiting "home"; I never got a speeding ticket in Iraq nor a jaywalking ticket in FYROM and the Iranian who used to sell me quasi legal vodka in Doha didn't ask for an ID to check my age. Likewise believe it or not, in Djibouti when I lived there for a couple years I could still use a disposable straw and a plastic shopping bag. I was even able to drink at the bar past 2 am and on Sundays to boot!! THE HORROR THE HORROR!!! Where was an American cop to jump out the bushes and fine me, maybe beat me up and arrest me?? Damn if only Djibouti was as free as 'Merica!
That said, I'll concede if we remove all arrest and investigatory powers from the police beyond immediate third party safety with detention limited to no longer than necessary to alleviate that immediate safety concern, then we can both agree on a police department that should get funded.
A good day for gangland syndicates then... Certainly a recruitment opportunity for all the mafia bosses, oh wait, they already employ enough police as is..
>that any centrist economist will happily tell you was a bad idea in the first place.
Any centrist economist in the US, maybe.
Yea I think we have to assume that the only comparator is the US in most Internet forums..
AFAIUI there are plenty of areas, though, where any economist will tell you some policy is a bad idea, yet on the broader non-expert political spectrum it's considered a radical libertarian idea to unwind it in most countries. That's not to say all economists are libertarians, but that they are on certain questions.
The fact that Milei actually reduced the size of national government and fired tens of thousands of government workers makes him a radical libertarian compared to basically any western politician.
Compared to Basically any politician anywhere
Show me a centrist economist who will publicly suggest disbanding the "Ministry of Women, Gender, and Diversity" or whatever the closest local equivalent is. I get that outside the US there's less support for that sort of thing, but I think active opposition at the abolish-the-department level is not a centrist position anywhere this side of e.g, Hungary. Really, show me any economist who would advocate that many government agencies be wholly disbanded, who is not broadly denounced as "right-wing",
Yeah, the stuff about rent control and fuel-price subsidies is pretty standard centrist economics, though "...even though people are really suffering right now and this will make things worse in the near term" is not really a centrist position. But there's also a lot that Milei has done, that I don't think anyone outside the libertarian and/or far-right wings would advocate actually doing. And if he's doing things that any centrist or libertarian would try to do, plus things that only a libertarian would do, then it seems pretty likely that he's a libertarian.
If he's not doing *everything* a doctrinaire Libertarian is supposed to do, then it's pretty likely that he's a libertarian who wants to win elections and actually get stuff done in the real world.
Is there any detailed economics about how economies respond to significant changes in policy?
I'm not sure how meaningful it is to say that a country that already had over 40% poverty rate and 25% monthly inflation "plunged into a recession."
Worse, as I noted in another comment, Argentina *was already in a recession in 2023* before Milei.
Recession is defined as a decrease in (real?) GDP. Also, recession refers to a rate of change, while the poverty rate refers to a current state, so that already means neither directly implies anything about the other on its own.
I'm aware of how a recession is defined in economics literature. But there is a difference between meeting some technical requirement and what that actually means for people on the ground. Which is why I asked how *meaningful* such a designation is, and especially a phrase like "plunge into a recession." Plunge is clearly not a technical term with a specific definition. If your economy is already a mess, how much worse can it be?
It could get plenty worse, there are countries 10+ times poorer than Argentina.
As an Argentine living in Buenos Aires, the 195.23% jump in rental supply sounds accurate. The previous law was severely disadvantaging landlords. At one point, I was paying just $70 USD a month for a 430 sq. ft. one-bedroom apartment in one of the city’s nicest neighborhoods, right next to a park and a subway entrance—while similar apartments were being listed for $400 USD. Landlords, understandably, didn’t want to risk being locked into a three-year contract, so many simply left their properties vacant.
The expectation that Milei would repeal the law likely contributed to the hesitation. No landlord wanted to list a property right before a more favorable law was expected to pass.
I want to point out that it's now considered normal that left and right-wing sources describe the same situation with opposite conclusions.
Opposite conclusions worry me less than opposite facts.
For example "the inflation is lower but the unemployment is higher, and that is a bad thing" and "the unemployment is higher but the inflation is lower, and that is a good thing" coming from two different sources are kinda okay, but "the inflation is lower" and "the inflation is higher" coming from two sources describing exactly the same data is disconcerting.
the Argentinian inflation is always unknowable
Milei's approval ratings look to be following a trend similar to that of Reagan in his first year in office.
Reagan took over with high ratings (because, I presume, he wasn't Jimmy Carter) and then as the screws got put on inflation (via Paul Volker) and the economy suffered Reagan got less popular.
If the Argentine economy picks up and inflation actually falls well below 4%/month I expect that Milei's approval ratings will trend up as well. If not ... then I don't know what Argentina will do.
https://news.gallup.com/poll/116677/presidential-approval-ratings-gallup-historical-statistics-trends.aspx
Do note your two sources about GDP are in agreement. The bottom one is just the red line from the top one.
Are you sure?
Yes
"...but everyone is united in hating the opposition."
If the Opposition was essentially pushing the country into hyperinflation through obvious abuse of printing money, and this only came to a stop because they lost the election, then I can definitely understand why the majority of the country dislikes them.
> The poverty rate soared from 42% before Milei to 53% now. It’s hard to tell how much of this is the bad policies of the last government coming to roost vs. Milei’s own fault. But Milei firing all those government workers, slashing subsidies, ending welfare programs, devaluing the peso, etc, have certainly contributed.
Slashing subsidies and ending welfare programs (which are just another form of subsidy) is an unequivocal societal good. Experience consistently bears out what theory suggests: subsidizing something unaffordable makes it even more expensive. Always.
> There are strong economic arguments to believe that abolishing rent control should lower prices in the long run. In the short run it seems like it could go either way. In this case, although there are some stories of people whose apartments got more expensive, the official statistics say prices have dropped by 27%.
It's entirely possible for both to be true: rent increased in some places, but overall, the average prices have come down significantly. In fact, it's a statistical near-certainty that *some* prices would go up even if the overall trend is down. Outliers are a fact of life and always have been.
Pensions are the largest part of social security and welfare.
If you are an elderly or disabled person reliant on welfare , welfare cuts are not a good. You are over generalising the tulip subsidy thing.
Yes they are not good. You should not be relying on extortion and racket to support yourself. Being elderly or disabled does not excuse it either
Sorry, just to clarify, is this satire? Or do you really mean it?
Deontological libertarian I'd say. Believe property rights exist in an absolute form prior to the state, and hence the state has no power to rearrange them for the common good.
Agreed
The fundamental question is what is the "right" thing to do. In order for an elderly or disabled person to receive money, someone else must provide it. If it is in the form of taxes, one can generalize that it is a small part of the taxes everyone pays.
Conservatives and liberals disagree on what is "right" for this. Conservatives say it's unfair for someone to receive an unearned benefit not freely given. Liberals say everyone deserves at least a minimum standard of living, regardless of circumstances. Both points of view have merit, and reconciling them is difficult, perhaps impossibly hard.
If you are an elderly or disabled person, you should judge the situation on its own merits, not whether you would personally be better off, but whether you think elderly or disabled people IN GENERAL should be supported by the rest of society.
It was not that long ago that this was a burden that was borne primarily by the individual in question's family, and by their church. Shifting it to be on the backs of the people in general has made things worse in a lot of ways, not only for society but *also for the individuals being cared for.*
Source: I have a family member who's a caretaker, and the stories they tell... wow.
> subsidizing something unaffordable makes it even more expensive
Only for demand-side subsidies (e.g. US tuition, healthcare). Supply-side subsidies do seem pretty effective at making the product cheaper (e.g. US corn, soybeans). Though I wouldn't exactly call corns and soybeans unaffordable, and maybe that's what you were getting at.
> Though I wouldn't exactly call corns and soybeans unaffordable, and maybe that's what you were getting at.
Yes. Supply-side subsidies distort the market in other ways that are also bad, but admittedly they're (probably) less bad than demand-side subsidies.
One comment regarding inflation: The reason a lot of people are "feeling" it more now than before is because, in Argentina, everyone "indexes" prices to US dollar amounts. The "weird" thing about this current period is that there was a lot of inflation while the real(ish) currency exchange stayed, on aggregate, flat (went from 1300 to 1000, then back to 1300 now it's around 1200).
So a lot of people are looking at USD denominated inflation, and seeing that it's been very high during Milei's term. There's a lot of reasons for that (rolling back of ridiculous levels of subsidies and price controls, high taxes on imports, etc.), but to even more sophisticated people it is a very striking effect.
Reading through this post in all its detail, it's difficult to reach the conclusion "Milei is failing" unless one has a strong prior that the thing he is attempting to do is bad. It seems clear that, in terms of his own goals, he is succeeding.
I think the first section is a pretty clear indicator that the way to reduce government deficits is to cut spending. Every time someone in the US proposes a tax cut there's inconsolable wailing about how this will explode the deficit. As if the government ever limits its spending on the basis of how much money it can rob from its citizens. No politicians in the US actually care about reducing the deficit, because if they did they would implement policies like Milei. I don't know if there will ever be the political will to cut departments and fire federal employees here in the US, but at least there is a convincing precedent that it works now.
Technically you are correct, of course reducing spending cuts the deficit. The question is, does it lead to economic recovery and growth ? For example, do all these universities really need electricity to do their work, or is sitting in the dark already good enough ? As Scott says, in Argentina's case it might be too early to say one way or the other.
They could try charging tuition to those who benefit from the university education. Radical idea I know.
They should go further and charge for all education down ti kindergarten and open up the mines for the rest.
Free market in schooling would be HUGE. Enormous benefits. If you want to give money to poor people in some way that's a separate issue.
Why on earth should government be spending on electricity?
If the government is going to maintain facilities (e.g. police stations, clinics, universities), then it might make sense to keep them powered.
And if you're going to have policemen, it might make sense to have them fed?
Er... yes ? Otherwise they'd either pack up and leave, or find some other ways of keeping themselves fed -- ways which would be less conducive to everyone's general well-being.
So, why not have the government run/fund farms, right?
> No politicians in the US actually care about reducing the deficit, because if they did they would implement policies like Mile
"President Clinton oversaw a healthy economy during his tenure. The U.S. had strong economic growth (around 4% annually) and record job creation (22.7 million). He raised taxes on higher income taxpayers early in his first term and cut defense spending and welfare, which contributed to a rise in revenue and decline in spending relative to the size of the economy. These factors helped bring the United States federal budget into surplus from fiscal years 1998 to 2001, the only surplus years since 1969. Debt held by the public, a primary measure of the national debt, fell relative to GDP throughout his two terms, from 47.8% in 1993 to 31.4% in 2001.[1]"
I'm not sure what your argument here is since you just quoted something out of context at me. But if you're saying it's a good thing when the presidency and Congress are controlled by different parties so they can't waste as much of our money, I already agree,
1. It is possible to balance budgets
2. Cutting spending isn't the only way.
3. So not like Milei.
I don't see how that follows from an example that involves cutting spending.
And raising taxes.
In an economy with strong growth, raising taxes on a small subset of people, as Clinton did, will have very little impact on tax collection. It will be swamped by generally buoyant tax collections. Cutting spending though, will have enormous impact, because it goes against the trend on government spending
President Clinton cut spending? Or he relented after negotiations and signed bills that Congress passed reducing spending growth well below what he requested they spend?
If it was only up to Clinton, lower spending would've never happened.
I don't think you can take that precedent very far at all. The US government does not spend its money in the same way as Argentina. Our spending is predominantly on Social Security, Medicare, Medicaid, and the military. You can take an axe to the Depts. of State, Education, Energy, etc. and it would barely budge the deficit.
(To be clear, there is plenty of wasteful federal spending and it should be curtailed for its own sake.)
The closest thing Milei did that could translate to us is a cut in the government pension program. And that's pretty signfiicant - but it's something he could probably only do because inflation was a beast that impacted everyone. You're not going to get US seniors to be OK with a 30% cut in benefits for the sake of a deficit that will likely never impact them.
Any serious program of deficit reduction in the US would have to involve (a) cuts to government medical spending (b) drastically scaling back our military or (c) tax increases. Any politician who is not talking about one or more of those is, exactly as you say, not serious about cutting the deficit.
This is much more of an is analysis than an ought analysis. I'm very aware that the biggest hurdle to fiscal responsibility in the US is government healthcare and retirement funds, and it would be political suicide to cut them. That doesn't change the fact that said programs are giant Ponzi schemes destined to bankrupt us.
If the U.S. kept all transfer programs intact (Social Security, Medicare, Medicaid) and maintained military spending at its current levels, and it then cut everything else (discretionary spending like Education, Energy, etc.) by 70%, and if the U.S. had no debt to service, the U.S. would actually have a surplus of approximately $620 billion instead of a deficit.
Oh, also, a point about the "rent control" law. The fact that landlords would sometimes make bank (well, nominally, at least--who knows if they could actually collect rent in those cases) isn't much of a solace. Building housing is capital-intensive and already somewhat risky (land values can change, it takes a long time to get your investment back, etc). The possibility of having your new apartments' rent locked in a too-low interest rate for several years probably has a very strong chilling effect on increasing supply.
Universities are all giving lectures in the dark and have been for almost 50 years......they just don't understand that the darkness of their minds is the source of most of societies current ills.
That's why we don't have AI yet.
I'm hoping that Milei's shock therapy will bring only 3 to 4 years of economic pain, followed by a rebound similar to the experiences of Poland or the Czech Republic in the 1990s, rather than the decade-long failure of Argentina's prior shock therapy under Carlos Menem in the 90s.
Argentina’s own history under Menem in the 1990s serves as a cautionary tale. While his reforms initially curbed hyperinflation, long-term structural weaknesses, mismanagement, and over-reliance on a currency anchor led to stagnation and a debt default in 2001. There are the risks that can come with poorly executed shock therapy.
The 195% increase should be units currently on offer. The notion that it could represent the entire rental supply seems deranged: I've seen some old estimates that around 20% of Argentina rents; the idea that an amount of housing equivalent to 40% of all housing came onto the market in a few years beggars belief.
Yes, it's units posted as available for rent, not the total supply including units currently being rented.
Thanks for this!
It sounds a bit Thatcheresque, and I wonder if it will lead to the same kind of polarization.
"How is Milei doing? Well? Not well? It's inconclusive, and we probably won't know until time marches forward a little more."
Alrighty?
(reading the linked Reddit thread)
> honestly, people need to understand that inflation is just a number. It's better to have medicine and education than this shit. He's literally killing people.
(closing the browser tab)
That reminded me of a certain Workers' Association of Slovakia politician in 1990s who deflected economical arguments by saying "we can't eat your graphs". Those were fun times; also high inflation, but maaaaaybe that's just a coincidence.
If education makes you think that numbers describing your situation don't matter, you should consider the possibility that your education sucks.
i'm not a fan of capitalism in general, but Czechia and Slovakia actually seem to have handled the transition to capitalism about as well as it could be done, and seem like admirably well functioning countries today.
their gini indices were among the lowest in the world under communism and are among the lowest in the world under capitalism too, for example.
Thank you for your kind words. From inside, it feels like we are always on the brink of a disaster, and yet somehow we always survive to see the next day.
Speaking for Slovakia, the transition to capitalism started by a populist government practically donating all the formerly state-owned companies to its party members, who ruined most of those companies, and then sold the remains on a free market to foreign investors. (The original plan was that the government would sell the formerly state-owned companies and somehow use the money to rebuild the economy. Instead the money ended up in private pockets of people whose only qualification was the party membership and who were obviously economically incompetent.)
Then the official strategy became "let's invite as many automobile producers as possible, by giving them tax breaks, and even lots of free money". Not sure how much sense that made economically (yes, we have lots of car companies, but what's the point if they don't pay taxes), and it felt horribly like putting all our eggs in one basket (if for some reason the cars stop selling, or if the car companies get a better offer from someone else and leave, we are all completely screwed), but somehow the previous huge unemployment was reduced to single digits. Then we somehow joined EU and NATO, during a brief time window when we *didn't* have a populist pro-Russian government.
Education is completely falling apart; all ambitious students go study in Czech Republic, and many of them stay there afterwards. Generally, young people are leaving the country in masses; about half of my former classmates no longer live here. As a software developer, I am economically quite okay (though as I understand it, in a different country I would probably be rich, rather than merely "quite okay"), but I have no idea how the average people can manage it. The current government practically made crime legal by setting the statute of limitations for many crimes (mostly economical ones, but also e.g. rape) to 4 years, which means that if they succeed to survive their election period (and I see no reason why not) all their previous crimes (and there are quite many of them) will be forgiven. Most people in this country seem to be okay with that.
And... you seem to suggest that compared to others, we are doing exceptionally well. That sounds like bad news for the world in general.
I am not sure how much the Gini coefficient is a good news, rather than an indicator that the kind of people who can get lots of money here are afterwards unable to keep it -- because they got the money thanks to their political connections rather than their economical skills, so it's easy come easy go. (Rather than because of taxes, which many of them probably don't pay at all, and never will, given the new statute of limitations.) But I may be wrong.
Can you talk about the "Poverty Rate" a bit more? In some cases it's not a great measure because it can depend on the currency value and/or the price of imports (which might not be that relevant to poor people).
It's % of pop earning less than enough to buy a specific basket of goods. Currency value/price of imports is very important for poor people, as their consumption basket (and the consumption basked used in the measure of poverty) are more weighted towards tradables than the general pop consumption basket. Even if you are not consuming imports (and in many places food is an import), if currency falls it's more advantageous to export goods, so local prices rises.
I don't understand why you say that he deregulated housing. It seems that the new rule is still the government forcing landlords to use a very specific pricing scheme?
Ah, the existential risk people were so close to getting it right: we'll actually be doomed by a pesoclip maximizer...
As much as it's confounded to update on foreign policy changes (uh...political changes in other countries, not policy changes regarding other countries), it's neat to see a really huge housing deregulation go off mostly as predicted. One wishes we could achieve that kind of abundance-grade velocity here, at least in the worst-impacted markets. 27% lower rents and 195.23% more housing in SF would be completely bonkers. (And hopefully not also tied to impoverishing the place...not that there isn't a lot of cruft to cut, but improving affordability by making places suck misses the point.)
Hopefully the shock therapy goes better than in the former USSR - where GDP dropped by 50% over the 90s.
something like a 60% contraction, yes.
before the overthrow of Qaddafi and Maduro's becoming president of Venezuela, both in the 2010s, they might have had the record for the biggest economic collapse in peacetime of any modern country?
I bet Maoist China would be a strong contender.
Not really- China had about 4.5% annual growth under Mao (between 1952 when this series starts and I think 1976 when he died). Slower than one would like, but still positive. There were a few years with Maduro- or Yeltsin-level economic contraction (notably 1961, which i think was during the Great Leap Forward, with a 26% decline) but that wasn't typical for the period.
https://en.wikipedia.org/wiki/Historical_GDP_of_China
I was thinking specifically of the Great Leap Forward period. It's not like Russia's downturn lasted forever either.
Fair enough.
Perhaps it'll go as well as it did in Poland? I think Poland is on the cusp of joining the developed country club.
Poland is projected to soon have a higher GDP per capita than the UK. But that says more about the UK than Poland.
The north of England (which suffered immensely from deindustrialization and the loss of manufacturing) is already about on par with places like Slovakia and Czechia if you correct for cost of living.
The "singularity" graph should have a log scale on the vertical axis in order to make the point that inflation has gotten worse recently. A naive reading of the graph suggests that, but of course any graph of constant-rate exponential growth will look like that. I version of that graph with a log scale on the vertical axis would let one determine whether the relative growth rate of the money supply is higher or lower recently than it has been in the past.
Yeah, I was annoyed by the lack of a log scale too. That kind of graph very obviously means nothing and makes it impossible to see the pattern.
I am confused by the header picture. Looks like a cosplayer? Is it someone cosplaying as a superhero version of Milei?
Milei is a cosplayer, and often campaigned in cosplay. He really is an internet libertarian who somehow attained actual political power.
One thing I suspect about the pre milei spike in inflation is that it was caused by milei himself. His promises of dolarization made the peso devaluate. It was more a sudden shift in the price level than inflation per se.
BTW a lot of the poverty rises could be just this inflation spike, and it should go away as the less flexible labor prices catch up to the more flexible product prices.
I'm kind of disappointed in how long he's taking to sort out Argentina foreign exchange market and lifting capital controls. Argentina still has lots of different official exchange rates, and it's not completely floating. It's certainly not the shock treatment i was expecting, but on the other hand, there's still a lot of gains to come if he follows through.
Economists say there are, broadly, four different kinds of national economies:
* Developing countries
* Developed countries
* Japan 🇯🇵
* Argentina 🇦🇷
Thank you. I could not quite remember the exact quote.
I moved to Argentina from Russia recently, and there is one thing that got bad under Milei that is important to me.
The price of medication has soared. I'm taking some psychiatric meds, and it was supposed to be a part of my budget that I don't give much thought about. Instead it's eating more than half of my post-rent supply, and I have to beg parents for financial assistance.
At least hormonal therapy is provided for free, Milei didn't cut that particular part of social programs yet. But the doctors I'm getting it from give me expired medication and apologize that under Milei the supply chain is experiencing issues and they just can't fill the demand.
My friends, who had been living here for longer than I am, report that after Milei took office their landlords keep increasing their rents on a whim, and I am about to have my rent upped by about a quarter at the start of the year.
As far as supply of housing goes, that 195.23% number is less ridiculous than it seems. My friend runs a small construction company in Mar del Plata suburubs, and they are printing houses at Starcraft worker speeds
If you don't mind revealing it to a stranger, what psych medication and how much does it cost? I'm curious how this compares to US prices and the gray market.
Emailed you
When you say "printing houses," do you mean they are using a 3D printer to build houses?
Not as far as I know, that was a metaphor. They are just building them very fast and in large quantities.
If only he was a libertarian. Free market capitalist and libertarian aren't synonyms. He's did absolutely nothing to promote or increase liberty in Argentina that didn't involve enriching his backers and you can't get much more NAP than recently reasserting Argentina's claim on the Falklands.
How is asserting or reasserting a claim in any way a violation of the NAP?
Claiming something that someone else owns, especially when the community all acknowledges that ownership as legitimate, is aggressive especially when to assert that claim you will have to use violence.
interesting thanks
It kind of seems like Latin America cycles between liberal capitalist governments that make money but concentrate it and leave lots of people poor, and socialist governments that distribute more equally but generate much less wealth and leave lots of people poor. Presumably you could theoretically time the switchoff to optimize wealth for the whole country in some utilitarian sense, though I doubt it would match actual realistic electoral politics.
I suspect they can't get out of the 'middle-income trap' because they can't make anything better than Japan or Europe or cheaper than Southeast Asia, and will remain like this indefinitely (or until something knocks down Europe, North America, and East Asia). Fundamentally, life is unfair and bad and some people having nice things means other people don't.
"some people having nice things means other people don't"
This isn't necessarily true, unless you're talking about some specific thing, like THE Mona Lisa. Everything people need and want is obtained through work, whether yours or someone else's, though not everyone's work has the same value (one day of work isn't fungible, but some KINDS are).
I'm pro-market and libterarianish, so I more or less agree with the goals of shock therapy. But I don't understand why it has to be quite so shocking. It seems like you could soften the blow and still accomplish the same thing by waiting a year or so for budget cuts and new laws to come into effect. The laws would already have been passed, but it would give those government workers and people who depend on subsidies time to find alternatives.
Why isn't this the approach? Are politicians worried that during that intervening year they'll lose political support and their reforms will be repealed before ever actually going into effect?
Yes, a more gradualist approach was tried in 2015, but the debt ballooned in order to finance the deficits of keeping things mostly running the same without cranking the money printer, and the social blowback was quite similar. They basically lost the mandate before being able to make substantial reform.
This time around, the debt was much higher (and debt service much more imminent) with net-reserves basically negative, access to capital markets very restricted, inflation much higher and the currency exchange rate pegged unsustainably low.
So while I'm not happy with the fact that people are suffering due to the shock therapy, I'm certainly glad they decided to go that route.
"Are politicians worried that during that intervening year they'll lose political support and their reforms will be repealed before ever actually going into effect?"
Maybe not in those exact terms,but it's more or less this, yes. Suppose for example that instead of just shuttering the Ministry of Useless Gender Horseshit, you went out and said "In exactly one year, I'm closing the Ministry of Gender Parasites, so all of you start working on getting new jobs during the winding-down period!". Now, you've given these ticks on the body politic advance warning to stage a fightback, and there's going to be a strong political lobby of them or such a ministry would never have been established to begin with.
Moreover, in the nature of things, virtually all the people working at a ministry like this will be committed ideologues; also, their degrees will be worthless for any real productive labor, or potentially worse than worthless. They'll be motivated to keep their existing jobs way beyond the baseline expected from the mere hassle and insecurity of a job search. The risk of ending up with a ministry that's just decimated and with watered down powers is extreme, and then your opponents will just proceed to bloat it up even bigger next time they get into power, scream-weeping about "chuds" the whole way to the bank.
Better in every way just to axe them immediately, tell them all to get out of the building within two hours, their jobs no longer exist, their access cards are revoked, fuck off. A fait accompli is much harder to fight back against, including in three or seven or whatever years when the ministry is long gone and nothing bad happened to society: how do you defend the reestablishment and maintenance of a horde of DEI creatures when everyone has lived experience for years of their nonexistence not harming anything?
Hans Hermann Hoppe commented on Milei's record a few days ago, bc Milei explicitly mentioned Hoppe and especially Rothbard (Hoppe's mentor) as his main inspirations.
Of course as an anarcho capitalist Hoppe has different metrics than Scott.
https://www.youtube.com/watch?v=PNMXW7rq7vA
It's not my fault you're so literal minded you take every accusation of official shenanigans entirely literally. I've run into this on ACX a number of times. Accusations of institutional dishonesty should be read with an appended, "or even if the no one is being intentionally dishonest, the incentive structures that affect them are creating outcomes that are beneficial for the perpetuation of the institution." Or in other words, any alleged conspiracy could easily be the result of thousands of people subconsciously seeing the data in a way that supports their interests. This is the exact kind of phenomenon you see when people use Ouija boards. In other words, instead of the dichotomy between conflict theory and accident theory, every conflict theory I refer to is nested inside of an accident theory.
You may ask me why I'm being obtuse, but I'm not doing it on purpose, this is just how people communicate. At least people in my milieu. Obviously, there are a lot of people who are totally committed Illuminati believers and believers in conspiracies. In my case, and in the case of many others, we use conspiracist language to show solidarity with the masses and to show disdain for the institutions we despise.
This is perfectly honest in my book. If I don't know whether something is caused by an accident or by a conflict, I don't think it's dishonest to frame everything through conflict theory in order to maintain maximum rhetorical pressure on institutions and corporations. I would never do this to an individual with no power or authority, that would be rude. But normal rules of etiquette don't apply to institutions, companies and people who have chosen to set themselves up as celebrities.
>The IMF says Argentina’s economy this year is among the worst in the world
Not really. That graphic shows *growth.* If the US were to suffer a slight recession, would you say it has a worse economy than Burundi, which is growing rapidly, even though the GDP per capita of the US is 370 times that of Burundi?
Argentina is struggling, but per the IMF's numbers, it still has a higher GDP per capita than most countries.
What they actually say about Argentina, includes:
>Decisive implementation of the stabilization plan—centered on a strong fiscal anchor with no new monetary financing, and relative price corrections—has led to twin fiscal and external surpluses, a marked turnaround in reserves, faster-than-expected disinflation, a bolstering of the BCRA’s balance sheet and a reduction in sovereign spreads to multi-year lows. Selected easing of FX restrictions and deregulatory efforts are improving resource allocation (https://www.imf.org/en/Publications/CR/Issues/2024/06/17/Argentina-Eighth-Review-Under-the-Extended-Arrangement-Under-the-Extended-Fund-Facility-550548)
It's also worth noting that not only do some countries (like Sri Lanka and Lebanon) not provide data to the IMF, external evidence, such as nighttime illumination, indicates widespread significant falsification of growth data by less free countries (https://archive.is/L8NrS). The fact that Argentina is one of only 7 countries that admitted to experiencing negative growth probably relates not only to their economic struggles, but to their exceptional honesty.
No major objections to the post unless I missed something. What flabbergasts me is people in the comments taking this as some sort of support of Milei. All the big, welfare relevant things are down- GDP, employment, real income, etc. etc. The main hopeful sign is some evidence that he has recently gotten inflation under relatively the previous mob. It's still far, far above historic levels.
Now it may be that this is just the first phase in shock therapy that reawakens the economy yada yada, maybe ultimately Milei's plan will work out great, but to say "the evidence shows he's doing great" on the basis of this post seems to me a pretty eccentric interpretation. If you have a different theory to me about what's likely going to happen, that's more than fair enough, I can even see how you'd argue that the current macro-indicators aren't the relevant in this case. However the current headline indicators are bad, and Scott makes that pretty clear.
My takeaway from this was:
Milei has pretty much done exactly what he said he would do.
Per my comment above, Opinions about him are utterly partisan and cast in stone. Even if Economics was an actual science with laws and methods and not just a shelter for op-ed columnists who struggled to even pass Linear Algebra, any "Economic Indicators" are always so mixed and inaccurate that any graph can be made at any time to support any opinion.
Although I admit I am predisposed to like TGJM, I think it is meaningful that:
-- His ideology stresses "freedom" and he has thought that through w/r/t economics and civil liberties.
-- His messaging has the bold consistent passion of either a maniac, or somebody who is very confident he has learned the Right Way.
-- He has pretty much done exatly what he said he would do.
When Milei was elected at the end of last year, I remember trying to talk to a freind/co-worker about him. Knowing my friend's political leanings (*) I just focused on how Milei's round face and crazy hair make his face incredibly meme-able. Still I noticed he looked pained.
"So I guess you don't approve...can I ask why?
"Well, I've heard he's a fascist."
I started to protest that dismantling state-owned industries and *less* government was the *opposite* of fascism, but he abruptly cut me off:
"I DON'T Want to talk about it!"
SO: 51% of people have been told he is evil and that's that.
* -- he drives around with NPR blasting at gangster-rap volume, gets invitited to private 50-guest concerts with Wilco at KCRW studios, and has a truly staggering number of tote bags.
It seems mental hair dos on a leader make swallowing increasing poverty easier somehow…
On Argentinian GDP growth: it is usually measured and graphed with respect to some base year rather than the year before. The shape is called "handsaw", classified in "upward handsaw", "downward handsaw", and just "plain handsaw".
The most recommended base year is 1945.
Good post!
I would love a post covering the recent VP debate. Reasons for a post: I thought the debate was fascinating, and potentially a key moment in American politics. First, it marked a major shift in debate tone (away from name calling, finally...), and second, it marked a major shift in how republicans present themselves (and possibly influences their future policy). Surprisingly, I think the debate might actually have an impact on the election.
> This source says the opposite and I don’t know why:
The Trading Economics chart is of year-over-year growth as opposed to monthly - and matches the red line in the Bloomberg chart.
Please note also that in South American countries it is quite harder to evict tenants if they insist on staying on property even if the owner don’t want to renew the contract. Eventually yes, they do have to leave, but there are plenty of legal intricacies and the courts are always notoriously slow and especially in Argentina and Brasil judges are generally biased against middle class owners (they do love big banks and corporations, though).
The challenge Milei faces is that historically while there comes a time where Argentinians recognize that some austerity is needed after years of rambunctious fiscal partying, their memory is usually short time and their patience is low. Also, Argentina is extremely vulnerable economically to external shocks, but the population tends to ignore this fact and the opposition usually capitalizes on it with laser focus.
Right now the biggest risk I see is associated with the still existing currency control. The central bank has been trying to slowly devalue the Peso in what is called a “crawling peg”, but investor are impatient and there’s increasing pressure for abandoning currency controls once and for all. But this would probably fuel inflation in the short term while the positive international competitive advantages of a realistic exchange rate would take way more time to be felt.
rad, thanks!! i had been wondering. very good work, much appreciate! <3 <3
If you want this for the USA, vote for Chase Oliver. Unless you live in a swing state, your vote is "wasted" anyway.
I would also note his first targets for liberalization were the ones with immediate tangible benefits, such as airline competition, and that he actually doubled social spending going to the poor (but cut the overall amount, including that for the rich, by half). Seems good regardless of any priors, no?
That his radicalism has not backfired also has to do with sentiment. Both the fascist Peronist candidate, Massi, Patricia Bullrich, and Milei were clearly in the liberal camp, and Peronism itself was already moving from the hard right (or left, that distinction is meaningless there) internally.
On housing supply nearly doubling: this is probably true and reflects massive supply used in ways to escape the rules reentering the formal market. A good chunk for air b n b alone… Real prices have already dropped by a whopping third, and of course the one thing where inflation really helps is speeding up deflationary adjustment.
Argentine here.
Again I'm surprised by how little international opinion digs into Spanish language sources. Everything I see in anglophone media is misinformed propaganda.
a point about Rent Control: first, it really didn't have much in common with North American rent control. The law was actually called "Ley de Alquileres", -Rental Law- it basically just established 3 year contracts (up from 2 years before) and made mandatory that periodic update of the rate following an index (tracking inflation among other things). Keep in mind, before the law almost all contracts included periodic increases, AFAIK it was 15% every 6 months in Buenos Aires just before the law, when inflation was like 50% YoY. The rental market in Argentina is -and was still under this law- pretty liberal compared to others: there's no obligation to renew any tenant and you can increase the rent as much as you like when writing new contracts. Funny enough, some years the index made it WORSE for tenants than what private contracts where increasing, and some the oposite so in the public perception everybody hated the law. And to my next point, when people say there was insufficient offer they only mention the traditional long term market, they never mention short term like airbnb, which was absolutely booming after the pandemic.
But the most important thing is the datapoint of the increase in units in the wake of the repeal of the law. What nobody mentioned is that the increase was only in the capital of Buenos Aires! There never was any widespread rental crisis in the country! (except a couple other tourist destinations like Bariloche) But why was there one in Buenos Aires? Well, after the end of the pandemic and until 2024 the Argentine peso was really devalued and the country was cheap. This created a boom in tourism that peaked in 2023 and lots of landlords put their units in Airbnb. Now with Milei inflation has skyrocketed in US Dollars and the country is extremely expensive. Tourism is completely dead, digital nomads have long left and Argentines are traveling abroad for shopping. With no tourists, landlords take their units off airbnb and back to the traditional market. The repeal of "Rent Control" is just a tiny plus if anything.
"There are four types of countries: developed, undeveloped, Japan and Argentina.”
We'll see if "shock therapy" works when you have enough state left you can stop capitalists from burning down the store while they loot it; but the last couple times it was tried things didn't go so well.
To be fair, that was less shock therapy and more electrocution unto Krispy Fried.
He’s more of an Austrian economist. He’ll do well.
>Inflation ... [has] so far ... been stubborn and stayed at the 4% level through the spring and summer.
I think it's too early to say that inflation has stopped dropping. After all, the inflation rate dropped quite a bit from April to May, so it may have just temporarily levelled off, while "catching up."
If you'd model the month over month inflation rate as decreasing by 20% per month since December, you'd end up in basically the exact same place. 25.5% * 0.8 ^ 8 = 4.28% which is quite similar to August's 4.2% MoM inflation.
Such a model would predict September's inflation to be 3.42%, and indeed, the newly released MoM inflation for September was 3.5%.
Of course, trends won't necessarily continue, and Milei's success in bringing inflation down by 86% may not continue, but so far so good.
Does anyone know what happened to Argentina’s gold?
Apologies in advance “4% monthly = 60% yearly”. 12*4=48.
It’s 48 not 60.
It’s 1.04^12, because percentages compound. 1.04 can be seen as 104% meaning 4% inflation over 12 months.
Ah. Thank you.