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Argentina’s Milei Goes All in on ‘Shock’ Policies in Bid to Save Country’s Economy

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From Heartland Daily News

Originally published by The Daily Caller.

“It’s a real shift worth celebrating, given that most investors did not have confidence in his ability to reduce the deficit just a few weeks ago. If anything, perhaps he’s going overboard in some ways.”

Javier Milei, Argentina’s newly elected libertarian and self-described “anarcho-capitalist” president, is embracing sweeping reforms to save the country’s struggling economy, even in the face of overwhelming obstacles.

Despite challenges arising from lawmaker opposition and a soaring inflation rate that has plagued the country for years, Milei’s “shock” adjustment actions have improved market and investor confidence both among the Argentinian population and abroad. Milei inherited a 140% inflation rate, an impoverished population and hundreds of billions in debt when he took office in December.

Milei acknowledged on the day of his inauguration that Argentina’s economy would temporarily get worse while he embraced “shock” adjustments to start making fixes.

“They have ruined our lives … There is no money!” Milei said during his inauguration speech. “Therefore, the conclusion is that there is no alternative to adjustment and no alternative to shock … this is the last straw to begin the reconstruction of Argentina.”

One of Milei’s first actions as president was to slash Argentina’s bureaucratic ministry from 18 to nine in a bid to reduce government spending, fulfilling a promise he made on the campaign trail, according to Reuters. Milei and his supporters saw several of the agencies as ineffectual and bloated with cash, including the Ministry of Transportation and Public Works, Tourism and Sports and the Ministry of Environment and Sustainable Development, which were absorbed by other existing ministries, according to the CATO Institute.

Milei also allowed the value of the peso currency to plummet by 50% in December to reduce export costs while also increasing the import costs, according to The Associated Press. The goal is to close the trade gap, making Argentina a bigger global trade competitor and stem the flow of money leaving the country, which would increase the stockpile of its exhausted foreign currency reserves.

The eventual plan for Milei is to replace the peso currency entirely with the U.S. dollar, another promise he made on the campaign trail, according to NPR. The U.S. dollar is prized in Argentina because it is generally stable and holds its value longer than the peso.

Temporary tax hikes were imposed by Milei’s administration to reduce the national debt and start balancing the budget according to the AP. Argentina’s budget deficit currently sits at 3%, and Milei has promised to balance it this year, according to Reuters.

Milei sent an omnibus reform bill to Congress in December that would privatize state-owned companies and raise export taxes, and remove limits on bonds issued overseas and on debt restructure rules, according to Reuters. He also issued a separate presidential decree in December to deregulate Argentina’s economy.

These actions are already having positive impacts. Argentina’s monthly inflation slowed down to 15.3% in February, much lower than the spike in December, according to Reuter’s forecast. The country also saw a monthly budget surplus in January for the first time in over a decade.

“The Milei administration has inherited a steep stabilization task, but has already taken some important steps toward restoring fiscal sustainability, adjusting the exchange rate, and combating inflation,” U.S. Secretary of Treasury Janet Yellen said during a press conference in late February.

Argentinian citizens have deposited over $2.3 billion in dollar-denomination banks since Milei took office, restoring the entirety of the banks’ losses from the last year and signaling that the population feels stability, as withdrawals typically increase during unsteady times, according to Bloomberg. Argentina’s bonds are at four-year highs and the country’s risk index has fallen to a two-year low, according to Reuters.

“The market is becoming very optimistic about Javier Milei’s conviction,” Javier Casabal, a Buenos Aires-based fixed-income strategist at Adcap Grupo Financiero, told Reuters. “It’s a real shift worth celebrating, given that most investors did not have confidence in his ability to reduce the deficit just a few weeks ago. If anything, perhaps he’s going overboard in some ways.”

Milei still faces several roadblocks. Inflation is still at record highs and poverty continues to consume much of the Argentinian population. Major provisions in Milei’s reform bill were blocked in early February by the country’s Congress, which he has referred to as a “nest of rats,” according to Reuters

Milei vowed to Congress during a speech on March 1 that he would “speed up” his reform plans, encouraging them to join his efforts but warning that he did not need them to accomplish his goals, according to Reuters.

“We won’t back down, we’re going to keep pushing forward,” Milei said. “Whether that’s by law, presidential decree or by modifying regulations.”

Milei’s government is now considering breaking up the reform bill and passing provisions separately through Congress, according to Reuters. He is requesting lawmakers to agree to a 10-point social pact, which would include negotiations in discussions on economic reform, by May 25.

Originally published by The Daily Caller

For more public policy from The Heartland Institute.

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Business

Carbon tax bureaucracy costs taxpayers $800 million

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From the Canadian Taxpayers Federation

By Ryan Thorpe

The cost of administering the federal carbon tax and rebate scheme has risen to $283 million since it was imposed in 2019, according to government records obtained by the Canadian Taxpayers Federation.

By 2030, the cost of administering the carbon tax is expected to total $796 million, according to the records.

“Not only does the carbon tax make our gas, heating and groceries more expensive, but taxpayers are also hit with a big bill to fund Prime Minister Justin Trudeau’s battalion of carbon tax bureaucrats,” said Franco Terrazzano, CTF Federal Director. “Trudeau should make life more affordable and slash the cost of the bureaucracy by scrapping the carbon tax.”

The government records were released in response to an order paper question from Conservative MP John Barlow (Foothills).

The carbon tax and rebate scheme cost taxpayers $84 million in 2023, according to the records.

There were 461 federal bureaucrats tasked with administering the carbon tax and rebate scheme last year, according to the records.

The CTF previously reported administering the carbon tax cost taxpayers $199 million between 2019 and 2022.

Projected costs for administering the carbon tax and rebate scheme between 2024 and 2030 are $513 million, according to the records.

That would bring total administration costs for the carbon tax and rebate scheme up to $796 million by 2030.

But the true hit to taxpayers is even higher, as the records do not include costs associated with the Fuel Charge Tax Credit for Farmers or the Canada Carbon Rebate for Small Businesses.

“It’s magic math to believe the feds can raise taxes, skim hundreds-of-millions off the top to hire hundreds of new bureaucrats and then somehow make everyone better off with rebates,” Terrazzano said.

The carbon tax will cost the average household up to $399 this year more than the rebates, according to the Parliamentary Budget Officer, the government’s independent, non-partisan budget watchdog.

The PBO also notes that, “Canada’s own emissions are not large enough to materially impact climate change.”

The government also charges its GST on top of the carbon tax. The PBO report shows this carbon tax-on-tax will cost taxpayers $400 million this year. That money isn’t rebated back to Canadians.

The carbon tax currently costs 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.

By 2030, the carbon tax will cost 37 cents per litre of gasoline, 45 cents per litre of diesel and 32 cents per cubic metre of natural gas.

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Economy

COP 29 leaders demand over a $1 trillion a year in climate reparations from ‘wealthy’ nations. They don’t deserve a nickel.

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From Energy Talking Points

The injustice of climate reparations

COP 29 is calling for over $1 trillion in annual climate reparations

  • A major theme of COP 29 is that the world should set a “New Collective Quantified Goal” wherein successful nations pay poor nations over $1 trillion a year to 1) make up for climate-related harm and 2) build them new “green energy” economies. In other words, climate reparations.¹
  • What would $1 trillion a year in climate reparations mean for you and your family?Assuming the money was paid equally by households considered high income (>$50 per day), your household would have to pay more than $5,000 a year in climate reparations taxes!²
  • Climate reparations are based on two false assumptions:1. Free, wealthy countries, through their fossil fuel use, have made the world worse for poor countries.

    2. The poor world’s main problem is dealing with climate change, which wealth transfers will help them with.

But free, fossil-fueled countries have made life better for poor countries

  • Free, wealthy countries, through their fossil fuel use, have not made the world worse for poor countries—they have made it far, far better.Observe what has happened to global life expectancies and income as fossil fuel use has risen. Life has gotten much better for everyone.³
  • The wealthy world’s fossil fuel use has improved life worldwide because by using fossil fuel energy to be incredibly productive, we have 1) made all kinds of goods cheaper and 2) been able to engage in life-saving aid, particularly in the realms of food, medicine, and sanitation.
  • Without the historic use of fossil fuels by the wealthy world, there would be no super-productive agriculture to feed 8 billion humans, no satellite-based weather warning systems, etc. Most of the individuals in poor countries would not even be alive today.

Free, fossil-fueled countries have made the poor safer from climate

  • The wealthy world’s fossil fuel use has been particularly beneficial in the realm of climate.Over the last 100 years, the death rate from climate-related disasters plummeted by 98% globally.

    A big reason is millions of lives saved from drought via fossil-fueled crop transport.⁴

  • The “climate reparations” movement ignores the fact that the wealthy world’s fossil fuel use has made life better, including safer from climate, in the poor world.This allows it to pretend that the poor world’s main problem is dealing with rising CO2 levels.

The poor world’s problem is poverty, not rising CO2 levels

  • The poor world’s main problem is not rising CO2 levels, it is poverty—which is caused by lack of freedom, including the crucial freedom to use fossil fuels.Poverty makes everything worse, including the world’s massive natural climate danger and any danger from more CO2.
  • While it’s not true that the wealthy world has increased climate danger in the poor world—we have reduced it—it is true that the poor world is more endangered by climate than the wealthy world is.The solution is for the poor to get rich. Which requires freedom and fossil fuels.

Escaping poverty requires freedom and fossil fuels

  • Every nation that has risen out of poverty has done so via pro-freedom policies—specifically, economic freedom. 

    That’s how resource-poor places like Singapore and Taiwan became prosperous. Resource-rich places like Congo have struggled due to lack of economic freedom.

  • Even China, which is unfree in many ways (including insufficient protections against pollution) dramatically increased its standard of living via economic freedom—particularly in the realm of industrial development where it is now in many ways much freer than the US and Europe.
  • crucial freedom involved in rising prosperity has been the freedom to use fossil fuels.Fossil fuels are a uniquely cost-effective source of energy, providing energy that’s low-cost, reliable, versatile, and scalable to billions of people in thousands of places.⁶
  • Time and again nations have increased their prosperity, including their safety from climate, via economic freedom and fossil fuels.Observe the 7X increase in fossil fuel use in China and India over the past 4 decades, which enabled them to industrialize and prosper.
  • For the world’s poorest people to be more prosperous and safer from climate, they need more freedom and more fossil fuels.The “climate reparations” movement seeks to deny them both.
  • The wealthy world should communicate to the poor world that economic freedom is the path to prosperity, and encourage the poor world to reform its cultural and political institutions to embrace economic freedom—including fossil fuel freedom.Our leaders are doing the opposite.

Climate reparations pay off dictators to take away fossil fuel freedom

  • Instead of promoting economic freedom, including fossil fuel freedom, wealthy climate reparations advocates like Antonio Guterres are offering to entrench anti-freedom regimes by paying off their dictators and bureaucrats to eliminate fossil fuel freedom.This is disgusting.⁸
  • The biggest victim of “climate reparations” will be the world’s poorest countries, whose dictators will be paid off to prevent the fossil fuel freedom that has allowed not just the US and Europe but also China and India to dramatically increase their prosperity.
  • The biggest beneficiary of “climate reparations” will be China, which is already emitting more CO2 than the US and Europe combined. (Though less per capita.)While we flagellate and cripple ourselves, China will use fossil fuels in its quest to become the world’s superpower.⁹
  • The second biggest beneficiary of “climate reparations” will be corrupt do-gooders who get to add anti-fossil-fuel strings to “reparations” dollars and dictate how it’s spent—which will surely include lots of dollars for unreliable solar panels and wind turbines made in China.

Leaders must reject reparations and champion fossil fuel freedom

  • We need leaders in the US and Europe who proudly:1. Champion the free world’s use of fossil fuels as an enormous good for the world, including its climate safety.

    2. Encourage the poor world to embrace economic freedom and fossil fuels.

    Tell your Representative to do both.

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Scientific American – COP27 Summit Yields ‘Historic Win’ for Climate Reparations but Falls Short on Emissions Reductions
2  Global population was about 8.02 billion in 2023.

World Bank data

About 7% of world population are considered high income, which translates into about 562 million individuals. Considering 3 people per average household in high income households, this translates into about 187 million households.
Pew Research – Are you in the global middle class? Find out with our income calculator

$1 trillion per annum paid by 187 million households means the average household would pay about $5,300 per year.

Maddison Database 2010 at the Groningen Growth and Development Centre, Faculty of Economics and Business at University of Groningen
UC San Diego – The Keeling Curve

For every million people on earth, annual deaths from climate-related causes (extreme temperature, drought, flood, storms, wildfires) declined 98%–from an average of 247 per year during the 1920s to 2.5 in per year during the 2010s.

Data on disaster deaths come from EM-DAT, CRED / UCLouvain, Brussels, Belgium – www.emdat.be (D. Guha-Sapir).

Population estimates for the 1920s from the Maddison Database 2010, the Groningen Growth and Development Centre, Faculty of Economics and Business at University of Groningen. For years not shown, population is assumed to have grown at a steady rate.

Population estimates for the 2010s come from World Bank Data.

UC San Diego – The Keeling Curve

Data on disaster deaths come from EM-DAT, CRED / UCLouvain, Brussels, Belgium – www.emdat.be (D. Guha-Sapir).

Population estimates come from World Bank Data.

Our World in Data – Energy Production and Consumption
BP – Statistical Review of World Energy
UN News – ‘Pay up or humanity will pay the price’, Guterres warns at COP29 climate summit
Our World in Data – Annual CO₂ emissions from fossil fuels, by world region
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