“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.
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The best academic estimates show that over the century, policies to achieve net zero would cost every person on Earth the equivalent of more than CAD $4,000 every year. Of course, most people in poor countries cannot afford anywhere near this. If the cost falls solely on the rich world, the price-tag adds up to almost $30,000 (CAD) per person, per year, over the century.
Canada has made a legal commitment to achieve “net zero” carbon emissions by 2050. Back in 2015, then-Prime Minister Trudeau promised that climate action will “create jobs and economic growth” and the federal government insists it will create a “strong economy.” The truth is that the net zero policy generates vast costs and very little benefit—and Canada would be better off changing direction.
Achieving net zero carbon emissions is far more daunting than politicians have ever admitted. Canada is nowhere near on track. Annual Canadian CO₂ emissions have increased 20 per cent since 1990. In the time that Trudeau was prime minister, fossil fuel energy supply actually increased over 11 per cent. Similarly, the share of fossil fuels in Canada’s total energy supply (not just electricity) increased from 75 per cent in 2015 to 77 per cent in 2023.
Over the same period, the switch from coal to gas, and a tiny 0.4 percentage point increase in the energy from solar and wind, has reduced annual CO₂ emissions by less than three per cent. On that trend, getting to zero won’t take 25 years as the Liberal government promised, but more than 160 years.One study shows that the government’s current plan which won’t even reach net-zero will cost Canada a quarter of a million jobs, seven per cent lower GDP and wages on average $8,000 lower.
Globally, achieving net-zero will be even harder. Remember, Canada makes up about 1.5 per cent of global CO₂ emissions, and while Canada is already rich with plenty of energy, the world’s poor want much more energy.
In order to achieve global net-zero by 2050, by 2030 we would already need to achieve the equivalent of removing the combined emissions of China and the United States — every year. This is in the realm of science fiction.
The painful Covid lockdowns of 2020 only reduced global emissions by about six per cent. To achieve net zero, the UN points out that we would need to have doubled those reductions in 2021, tripled them in 2022, quadrupled them in 2023, and so on. This year they would need to be sextupled, and by 2030 increased 11-fold. So far, the world hasn’t even managed to start reducing global carbon emissions, which last year hit a new record.
Data from both the International Energy Agency and the US Energy Information Administration give added cause for skepticism. Both organizations foresee the world getting more energy from renewables: an increase from today’s 16 per cent to between one-quarter to one-third of all primary energy by 2050. But that is far from a transition. On an optimistically linear trend, this means we’re a century or two away from achieving 100 percent renewables.
Politicians like to blithely suggest the shift away from fossil fuels isn’t unprecedented, because in the past we transitioned from wood to coal, from coal to oil, and from oil to gas. The truth is, humanity hasn’t made a real energy transition even once. Coal didn’t replace wood but mostly added to global energy, just like oil and gas have added further additional energy. As in the past, solar and wind are now mostly adding to our global energy output, rather than replacing fossil fuels.
Indeed, it’s worth remembering that even after two centuries, humanity’s transition away from wood is not over. More than two billion mostly poor people still depend on wood for cooking and heating, and it still provides about 5 per cent of global energy.
Like Canada, the world remains fossil fuel-based, as it delivers more than four-fifths of energy. Over the last half century, our dependence has declined only slightly from 87 per cent to 82 per cent, but in absolute terms we have increased our fossil fuel use by more than 150 per cent. On the trajectory since 1971, we will reach zero fossil fuel use some nine centuries from now, and even the fastest period of recent decline from 2014 would see us taking over three centuries.
Global warming will create more problems than benefits, so achieving net-zero would see real benefits. Over the century, the average person would experience benefits worth $700 (CAD) each year.
But net zero policies will be much more expensive. The best academic estimates show that over the century, policies to achieve net zero would cost every person on Earth the equivalent of more than CAD $4,000 every year. Of course, most people in poor countries cannot afford anywhere near this. If the cost falls solely on the rich world, the price-tag adds up to almost $30,000 (CAD) per person, per year, over the century.
Every year over the 21st century, costs would vastly outweigh benefits, and global costs would exceed benefits by over CAD 32 trillion each year.
We would see much higher transport costs, higher electricity costs, higher heating and cooling costs and — as businesses would also have to pay for all this — drastic increases in the price of food and all other necessities. Just one example: net-zero targets would likely increase gas costs some two-to-four times even by 2030, costing consumers up to $US52.6 trillion. All that makes it a policy that just doesn’t make sense—for Canada and for the world.
The Canadian Taxpayers Federation released Leger polling showing Canadians want the federal government to cut spending and shrink the size and cost of the bureaucracy.
“The poll shows most Canadians want the federal government to cut spending,” said Gage Haubrich, CTF Prairie Director. “Canadians know they pay too much tax because the government wastes too much money.”
Between 2019 and 2024, federal government spending increased 26 per cent even after accounting for inflation. Leger asked Canadians what they think should happen to federal government spending in the next five years. Results of the poll show:
43 per cent say reduce spending
20 per cent say increase spending
16 per cent say maintain spending
20 per cent don’t know
The federal government added 108,000 bureaucrats and increased the cost of the bureaucracy 73 per cent since 2016. Leger asked Canadians what they think should happen to the size and cost of the federal bureaucracy. Results of the poll show:
53 per cent say reduce
24 per cent say maintain
4 per cent say increase
19 per cent don’t know
Liberal Leader Mark Carney promised to “balance the operating budget in three years.” Leger asked Canadians if they believed Carney’s promise to balance the budget. Results of the poll show:
58 per cent are skeptical
32 per cent are confident
10 per cent don’t know
“Any politician that wants to fix the budget and cut taxes will need to shrink the size and cost of Ottawa’s bloated bureaucracy,” Haubrich said. “The polls show Canadians want to put the federal government on a diet and they won’t trust promises about balancing the budget unless politicians present credible plans.”
