Murray Rothbard
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Article here: https://mises.org/power-market/defense-milei
When Milei entered the government, Argentina was in a state of economic, monetary and fiscal crisis. The pernicious consequences of a more than decade long policy of monetary and fiscal laxism came all at once: an inflation rate that was running at 1% per day, which when annualized reads 3700%, a twin fiscal deficit of 15% of GDP (5% in the Treasury and 10% in the central bank) and a 12 year long period of stagnation. Given that Argentina had lived in a state institutional anomie for the past two decades, Milei found many non-viable roads in front of him.
When Milei took over in December wholesale prices increased at a rate of 25.5% per month, whereas the last inflation measures report a monthly rate of 4% in July of this year.
In this regard then, while a libertarian can rightly criticize the increase in certain taxes (impuesto pais, fuel, and salaries) done by Milei’s government, the greater chunk of the budget surpluses came through cuts in government spending, which has decreased by almost 35% in real terms. Milei’s government has set a new record in Argentina, having dismissed the highest number of civil servants in the first seven months of his mandate. According to the last report on public staff published by Instituto Argentino de Analisis Fiscal 30.936 state employees were fired by Milei during his first semester.
Another important area where Milei made important advances from the beginning is deregulation. Starting with his Decreto de Necesidad y Urgencia, Milei repealed more than three hundred regulations that have been stifling business since the days of dictator Ongania (1966-70), from rent control to legal tender laws.
Now, with his reform plan (Ley Bases) finally accepted in both chambers, some privatization will be in the horizon. This will increase the portion of the budget surplus attributable to both legitimate and economizing ways of implementing austerity. In a next step, moreover, further deregulations accompanied by growing tax cuts are envisioned. In some sense, this process has already started. At the beginning of August 2024, the government enacted decree 697/2024, eliminating taxes on all cow-related beef cuts and withholdings on the export of swine meat. Along with this, the decree provided for a 25% reduction of withholdings on all animal proteins and a permanent elimination of export duties on dairy products, returning overall an estimated 130 million dollars to the pockets of producers.
In the meanwhile, Milei’s government has eliminated withholdings on VAT and profits on business sales. Furthermore, Milei lowered the tax on imports (impuesto pais) to 7.5% and announced that by December 2024 it will be abolished, significantly alleviating commerce and business.
When Milei entered the government, Argentina was in a state of economic, monetary and fiscal crisis. The pernicious consequences of a more than decade long policy of monetary and fiscal laxism came all at once: an inflation rate that was running at 1% per day, which when annualized reads 3700%, a twin fiscal deficit of 15% of GDP (5% in the Treasury and 10% in the central bank) and a 12 year long period of stagnation. Given that Argentina had lived in a state institutional anomie for the past two decades, Milei found many non-viable roads in front of him.
When Milei took over in December wholesale prices increased at a rate of 25.5% per month, whereas the last inflation measures report a monthly rate of 4% in July of this year.
In this regard then, while a libertarian can rightly criticize the increase in certain taxes (impuesto pais, fuel, and salaries) done by Milei’s government, the greater chunk of the budget surpluses came through cuts in government spending, which has decreased by almost 35% in real terms. Milei’s government has set a new record in Argentina, having dismissed the highest number of civil servants in the first seven months of his mandate. According to the last report on public staff published by Instituto Argentino de Analisis Fiscal 30.936 state employees were fired by Milei during his first semester.
Another important area where Milei made important advances from the beginning is deregulation. Starting with his Decreto de Necesidad y Urgencia, Milei repealed more than three hundred regulations that have been stifling business since the days of dictator Ongania (1966-70), from rent control to legal tender laws.
Now, with his reform plan (Ley Bases) finally accepted in both chambers, some privatization will be in the horizon. This will increase the portion of the budget surplus attributable to both legitimate and economizing ways of implementing austerity. In a next step, moreover, further deregulations accompanied by growing tax cuts are envisioned. In some sense, this process has already started. At the beginning of August 2024, the government enacted decree 697/2024, eliminating taxes on all cow-related beef cuts and withholdings on the export of swine meat. Along with this, the decree provided for a 25% reduction of withholdings on all animal proteins and a permanent elimination of export duties on dairy products, returning overall an estimated 130 million dollars to the pockets of producers.
In the meanwhile, Milei’s government has eliminated withholdings on VAT and profits on business sales. Furthermore, Milei lowered the tax on imports (impuesto pais) to 7.5% and announced that by December 2024 it will be abolished, significantly alleviating commerce and business.
