'No Free Lunch'
Javier Milei delivers Argentina's first fiscal surplus since 2008...along with an important lesson
“There’s no such thing as a free lunch.”
~ Milton Friedman
Joel Bowman, with today’s Note From the End of the World...
Now here’s a “net zero” we can get behind!
In a historic television address to the nation this week, Argentina’s chainsaw-wielding libertarian president, Javier Milei, announced the country’s first quarterly fiscal surplus since 2008...and promised his unwavering commitment to stay the course, despite dogged opposition from tax-and-spend parasites in the “political caste.”
“The fiscal surplus is the cornerstone from which we are building a new era of prosperity in Argentina,” Milei told viewers from the presidential palace here in the capital city. “We are making the impossible possible...even with the majority of politicians, unions, the media and most economic actors against us.”
From the outset, Milei placed fiscal discipline at the very center of his economic reforms. Indeed, “non-negotiable fiscal balance” comes in at Item #2 on the president’s Pacto de Mayo, which he invited governors around the country to join him in implementing last month.
“Zero deficit isn't just a marketing slogan for this government,” Milei declared in solemn, unambiguous terms, “it is a commandment.”
The total fiscal surplus for Q1 2024 came in at $309 million, or about 0.2% of GDP. Here’s the front page graph, from the Ministerio de Economía:
As for what to do with the surplus, that’s where Item #1 of the Pacto comes in, the “inviolability of private property.” Remarked Milei...
“Every peso left over to the state will not be used to increase public spending, it will be returned to Argentines through tax reductions.”
~ Javier Milei, 2024
Taxation is Theft
Gentle readers, long accustomed to legalized theft at the hands of that gang of criminals known as the state, may have to read that last sentence over a couple of times.
Your money… your property... your life...
These are concepts virtually unknown in the “civilized” world, where permission-based living has sadly become the norm among once-free peoples. (There was zero income tax in the United States of America prior to the year 1913... and yet, citizens of that great republic appeared not to suffer terribly from its absence.)
Needless to say, financial markets have responded positively to the economic turnaround here so far. Argentine bonds have risen near 60 cents on the dollar from their lows around 20 cents over the last year, while the country’s risk index has plummeted 40% since Milei took office. It currently sits at its lowest level in five years. Capital is beginning to return to the country as investors eye Argentina’s vast resources with cautious optimism.
Of course, not everyone is happy with this state of affairs... particularly those who arrive thirsty at the public trough each and every day, feeding snorkels in hand. Cue the classic case of insiders vs outsiders, producers vs consumers, net contributors vs net recipients.
Earlier today, a few thousand jilted students and university faculty members skipped class to march through the streets of downtown Buenos Aires, a few blocks from where we pen this very Note. (We recognized the unmistakable smell of patchouli and basic economic ignorance on the cab ride in, even before we’d seen the news.)
No Free Lunch
It is perhaps a little known fact outside South America that Argentina’s public universities – aka, Marxist Propaganda Ministries – proudly offer “free” tuition... even to non-Argentine residents. For decades now, wannabe Che Gueveras from home and abroad have flocked to the bustling capital to master the art of affected grievance and learn about their helpless oppression, mostly at the hands of actual workers whose taxes fund their indoctrination camps.
Recognizing that Milton Friedman’s “no free lunch” lesson is seldom taught in these bastions of collectivist idiocy, Sr. Milei offered his own, complimentary crash course in Economics 101 during last night’s speech:
“If the state does not spend more than it collects and does not issue (excess money), there is no inflation. This is not magic.”
The point is not merely academic, especially in a country that endured nose-bleed levels of inflation (the world’s highest, in fact) under the last administration. Students may or may not have bothered to notice that, as a “sneaky tax” which erodes consumers’ purchasing power, inflation most heavily impacts the very poorest among us, those struggling just to survive, for whom a day parading around the Plaza de Mayo whining about pronoun transgressions and cuts to safe space funding would be utterly unimaginable.
If these innumerate barnacles understood just how pernicious runaway inflation was, perhaps they would stop and thank Sr. Milei for having reined in the country’s official levels from 25.1% month-over-month through January… to 20.6% through February… to 13.2% through March… to 11.0% through April. And falling still…
Although we doubt Sr. Milei is holding his breath, waiting for the centavo to drop over at the protestors’ drum circle, we imagine he was encouraged to read the following note from someone who actually does know a thing or two about economics, Sr. Jesús Huerta de Soto.
Long live freedom, dammit!
The Austrian School economist posted this message (translated) a few weeks back, encouraging leaders around the world to pay close attention to what’s happening down in Argentina. (Emphasis ours.)
All rulers, politicians and citizens of the world should listen carefully to President Milei's historic speech of yesterday, March 1, 2024.
Argentina is not very different from the rest of the nations in terms of rampant statism and dictatorship of political correctness, although it has been much more vulnerable for the duration and degree of intensity in the application of scientific errors and political vices that come from and are exactly the same as in the USA, Europe, Germany, France, United Kingdom, etc., and of course Spain.
All these countries have so far been able to afford the "luxury" of rampant socialism only because of the volume of capital and prosperity they accumulated in the past, but if they continue on the wrong path they are doomed to the same economic and moral decadence and political corruption.
With yesterday's speech Milei not only confirmed himself as a consummate economist, which he already was and we knew it, but also as an astute and accomplished politician: in short, the most important statesman of today and the only model to follow to reverse the social crisis of our time.
Long live freedom, dammit!
Of course, dear readers of these humble pages have been on the story from get go. This is it, folks, The Greatest Political Experiment of Our Time. You’re going to see, one by one, people around the world wake up to what’s going on. And you’re right here for the ride. Thanks for your interest.
Stay tuned for more Notes From the End of the World…
Cheers,
Joel Bowman
P.S. Thanks again to our dear Notes members, old and new. We’re ever grateful for your generous and ongoing support.
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I do not want to cast a black cloud over this accomplishment as a lesson for those of us in the US; but I am afraid I will. This success, and how it was achieved, simply will not work in the US. It might be a good start to create a mindset of fiscal discipline, but...the barriers to fixing our budget imbalance are not discretionary sending...they are entitlements, transfer payments and interest on the debt that are baked into law, and are now "non-discretionary." In fact, if we cut all Government spending (excluding the military) we would still not likely be even close to a surplus.
Joel, your notes on Milei's words and adventures provide unique insight into what can happen when a principled man, educated in history and economics and supported by the majority gains political power. I am cheering on his success, hoping he stays strong and finds ways to fend off what will no doubt be continuing attacks from the big government types. Most importantly for his tremendous success that all can point to as the better way. I consider your Notes on this developing situation a must read. Thanks Joel.