 Though radical, fundamental principles of green milk, rational self-interest, and individual rights. This is the Iran Brookshow. All right, everybody. Welcome to Iran Brookshow on this Thursday, January 4th. I hope everybody's having a fantastic week and looking forward to the weekend. We've got a terrific show, I think. Today, we're going to talk about one of the hot topics in the world right now, but certainly I know among the people who listen to this show, and that is the prospects for Mille's presidency in Argentina. And I've got a real expert and economist from Argentina, who is a professor at the University in Buenos Aires and also an associate researcher at the University of Desavoyo in Chile. I think I got it right. And that is Ivan Carino, who is joining us from Buenos Aires. So thank you, Ivan, for joining us. Oh, it's a pleasure. Hi there, Yaron. Hi, and hi, everyone who's watching. So I thought I'd start with just kind of the history, because I think the history of Argentina is fascinating in the sense that I remember when I was there, somebody told me that in 1914, at the beginning of World War I, basically Argentina was almost as rich as the United States on a kind of per capita GDP or some other measure of wealth basis. And of course, today, it's something like a quarter of the United States or even less than that. So how did we go? First of all, how did it get rich? And then how did it get poor? Yeah. Well, yeah, according to which database you get from Angus Madison, you can find a year. I think it's 1905 when Argentina was the richest country in the world, according to per capita GDP measures, right? Well, but then if you get the other database, we would be number six. So it's not bad at all, right? Given the situation we are facing now, of course, you could say that we were much better in relative terms in comparison to the rest of the world at the beginning of the century. Well, there's some explanations for this. There's, of course, the liberal view, the libertarian position on why did we get rich, which is because we had, at the beginning of the century, we had a lot of space, a lot of big territory. That's something important. We had resources. But we also had good institutions, right? I mean, in 1853, we had this lawyer who was also a journalist, who was also an economist. And he read Adam Smith, he read David Hume, he read the philosophers of the Enlightenment, right? And he was a follower of that tradition. His name was Juan Bautista Alverdi. And he became one of our most important figures in the political area and through a book that he wrote in 1852. After that book came our constitution and it kind of followed the ideas of that book, which were also following the ideas of the American constitution and the Declaration of Independence in the United States, right? So freedom of trade, individual rights, all of those ideas were very clear, very straightforward in the first, let's say, 20 to 25 articles in our constitution. So we had good institutions, big territory. We were rich in terms of natural resources. And then people started coming because we were an underpopulated country. We had native population. It was not enough. We had, of course, the Spanish who discovered or conquered America in the 15th century, right? At the end of the 15th century. But that was not enough. But after the 1850s and at the beginning of the centuries, then people started coming from Europe mainly and we had a growing population. So then we had the main things you need to get rich, right? People in order to work, resources in order to transform, but also good rules and respect for private property in order that this makes sense, right? So there is some consensus, at least among liberal thinkers in Argentina, that we were such a country that we became so important because of our rules and our institutions and mainly because of the constitution of 1853 and what came after, right? Of course, that became lost, but that's the second part of the story, right? Yeah, so what happens then that is you're rich and obviously something's happened over the last hundred or so years to make you, you know, at least relatively far less rich. Yeah, so something happened worldwide, actually, because if you think about this free market ideas where kind of well established in the world, in Argentina, but also in the United States or in England, let's say in the last part of the 19th century and the beginning of the 20th century. Of course, there were debates, you know, there were some criticisms and some theorists in the economic arena talking about market failure, etc., but it survived, right? The trust in free market ideas was still there, but then came the Great Depression, right? So I would say that the Great Depression was like one big bomb that exploded in the world and made us, let's say, the people living in the world a bit more sceptic and fearful about free market, right? And then the idea started to grasp interest that free market led us into this, right? Led us into this depression and unemployment and people are getting poor and we need an active policy by the government of spending and regulating and cutting on trade and raising tariffs, etc., and those ideas came to Argentina also and those ideas lasted longer. Let's say, if in the States it took until, let's say, the Second World War and then confidence in the free market regained a bit of space, it wasn't like that in our country and in the 30s, especially, we had our first coup d'etat, right? So it was a military revolution, the democratic order was broken, it was a really young democratic order because we used to have elections where not everyone would participate and they were not really serious or transparent, but we did have a democracy that was cut in 1930 and the president, this military guy, brought these ideas, interventionism and protectionism, right? And we had a lot of protectionism, like raising tariffs, trying import substitution, etc., regulating markets, regulating prices, regulating wages and all of that led to a huge or a very big level of inefficiency and Argentina, once a very rich nation, very efficient, very productive nation, became less productive, less efficient and we started losing our relative position in the world and to get more to our times, we started developing this taste for deficit spending, the government needs to do many, many things and it doesn't matter if it can collect enough taxes, let's spend, right? So we developed these states for deficit spending, which led to death crisis, we had many through our history, but also many, many inflation crisis, so we had two hyperinflations at the end of the 1980s and of course now we're not in a hyperinflation, but our inflation rate is 160% annually and this month, December, it's gonna be 25% monthly, so that's totally crazy, but it has happened many times for the last 50 years, so inflation became a constant phenomena in Argentina and this is even worse nowadays because if you think about the 80s, for example, you would come to Argentina and you would say, oh Argentina, terrible inflation, but then you would go to Brazil, next to us, oh terrible inflation and then you go to Peru, a bit north, oh terrible inflation, but that's not the case now, now the only country with our inflation problems, it's Argentina and Venezuela, so we didn't learn the lesson now, so that's why this model came to a final like collapse or it became, people are very tired about what's happening and that explains more of the political scenario we are living or we have been living in last year and starting now. And is there a sense in Argentina that they've tried everything, they voted for the left, they voted for the right and nothing seems to matter because Marci, who was president before, seemed like a failure. Yeah, that's a common place to, I've heard that before, right, even our former president, Cristina Fernández de Kirchner, she once said in Argentina, you need something like this, right, you need to burn the economic textbooks because they don't work, they don't work, it doesn't matter if they're written by leftists or if they are written by orthodox economists, they will not make any sense, but that's really not true. The truth is that we haven't tried enough, we haven't been patient enough to try the orthodox textbook and I need to do some defense of orthodoxy because orthodoxy, if you think of medicine or, I don't know, fixing a car, engineering, there is some orthodoxy. Orthodoxy is the thing that works, is what everyone thinks that they agree on. All right, all right, I have this problem in my stomach, let's meet with three doctors. If they agree that I need to go under surgery, then probably I should take the surgery, right? If they go to three mechanics, they are different and they see my car and they say, you need to change this part, I should probably change that part, right? I mean, why would I argue with them? They have studied, they have the experience and the same thing happens in economics. It is a science, people are studying it for so long and even though there are differences, if you take a Keynesian economist, a monetarist economist and an Austrian economist to look at the Argentine economy, they will agree and they will be like, okay, you need an adjustment, you need to reduce spending, maybe you need to raise some taxes, you need to reduce the deficit and you need to deregulate the economy because this is, it has been an excess, you have gone way far. Even the Keynesians, it's an excess. Exactly, yes, oh yes, definitely the Keynesians. Even though they are more, they like spending a bit more, they don't cry at the first deficit you have, but once you have 10 years in a row with that deficit that you cannot finance, even they will say, well guys, it's enough, this can't go on forever and many, many, many economists who are not necessarily libertarian, they would be they will be in favor of orthodox measures of adjustment. So, have we tried everything? Well, we had governments of different political parties, right? Peronists, the so-called radicals, we had military regimes, some of them would try some free market measures, but they were kind of isolated, you know, and they didn't make much, they didn't fix much, because if you, let's say, if you reduce a trade barrier, which happened in the 70s, you reduce some trade barriers, but you still have a huge deficit, you still don't have any genuine source of finance, you will have a debt crisis, you will have an inflation crisis, and that's what happened many times in our history. And with Macri, in order to conclude, Macri had kind of the same problem, he arrived at the presidency, he decided to eliminate many price controls, many exchange controls, and that was very good, he needed to do that, it was the correct path to take, but he didn't correct the deficit quickly enough. And when he said, oh, I think this is a problem, it was too late, and markets who were really confident in Macri in his two first years in government, they were running out of Argentine bonds and stocks and currency, and he couldn't stop the crisis that we had, but it was a crisis originated in the government deficit and the government debt. So not a problem of free market capitalism and a small role for government, but a problem of too much spending in relationship to your taxes, right? So tell us a little bit about Millet, where does he come from, what's his background, and how did he get to the position he is in today? Well, it's a very interesting story, Millet is a fascinating character. As far as I know, if you think of Millet in the year 2012 or 2013, he was an economist, he was a professional economist, he was working at a very big private firm here, a private firm which, for example, runs the airports in Argentina, so an important company, he was more of an orthodox economist, that was his background, he studied that, he didn't like the state, he was not an interventionist, he was not a socialist, but he was not loud about it, nobody knew him, he was a teacher, he used to be a teacher or he taught in some universities, and this is what I know, I mean, I don't know if this was 2011, 2012 or around there, he was a teacher at this, he was a professor at this university and he was very strict, he taught mathematical economics and he had this student who was one of his only good students according to his standards, because he was very strict, so he approved the subject, so Millet told him, well, I want you to come and teach with me, so they developed a relationship and then they started working together in this company that I'm telling you, the airports, and they got this relationship and Federico, his student, he had read, he was an economist too, he was a graduated economist now, and he was fond of reading libertarian thinkers, Aynbaran, Friedrich Hayek, Louis von Mises, Milton Friedman, he was a big fan of Milton Friedman, and Millet was also a big fan of Milton Friedman, but there was an argument between them, Federico and Millet, and Millet says, I don't know, and Federico says, I think in terms of monopoly theory, I think you need to read this guy, this American economist called Murray Robert, and then Millet says, okay, so I need to read Murray Robert, how do I get a book of him, and then he found this libertarian bookstore in Argentina, which is called Unión Editorial, and I know the seller there, and the seller will sell you 10 books if you go and we're looking for one, so Millet started talking to Rodolfo, who is this book seller, and he bought like 20 books, all of Austrian economics, you know, Rothbard, Hayek, Mises, et cetera, and let's say that was around 2014, in 2015, because that's when he started his more public appearances, because Millet and Federico, his former student, and another economist, who they became friends of, Diego Chacomini, they published this book about the collapse or the imminent collapse of the Kirchnerist model, so Cristina Fernandez de Kirchner was finishing her second term, and Macri was coming, right? We didn't know that Macri was coming in this time, but they published this book, bringing a solution, a very orthodox solution, to the problem Argentina was having, which implied, or which suggested, a strong fiscal adjustment to reduce subsidies, destined to subsidize energy consumption and gas prices, et cetera, so their suggestion, their proposal was reduce those subsidies, balance the budget, and you will terminate inflation, so it's a very orthodox, nothing Austrian there, very, very normal, let's say, but he gained some visibility with that book, so he had, and he started going to media interviews, and of course, the best part, is that they started facing him or getting him to debate other economists or politicians, who, as you can think, they were Keynesians, they were Socialists, they were Peronists, and Millet became crazy with them, and he was like, no, you're a Keynesian, your leader is a disaster, and Keynes' book is a garbage, and we need to throw it to the dustbin, so that personality became, I mean, people became crazy with that personality, and it became viral, you know, and everyone would be like, oh, have you seen this guy? He's like, he's like going crazy on economics, who would do that, you know, and that was very fun, and then the government changed, and then came Macri, and Macri placed in the central bank an MIT economist called Federico Trusenegger, a very well-known, very good economist, who tried to implement a inflation targeting regime in Argentina, and it's not that it didn't work, it's that, as I was saying before, we were not paying attention enough, and we didn't fix the underlying problem, which was the deficit, right? So at the end of 2017, other people in government decided that the monetary policy was being too strict, and they decided that the central bank should reduce interest rates, and they kind of imposed that to him, and that was a blast for the economy that didn't suit, didn't like, markets didn't like that, and we started, a crisis started, an exchange crisis started, the dollar was around 17, it ended up next year in 40, so in an economy that had 25% inflation in those times, so it was very bad, and also Millet, because we were talking about Millet here, Millet kind of liked the work that Trusenegger was doing in the central bank, so he was very horrified when he saw all this, and he started being very critical of Macri's government, and he started saying this is going, well, before that, also before that, he was saying be careful with the deficit, you're not fixing the deficit, this can lead us to a crisis, and then after that, the vulneration of the independence of the central bank, then Millet was very a hard, a very hard critic of the whole Macri government, which gave him a lot of credibility, because in the meantime, our economy was stagnated from 2011 until today, stagnation and even decline in per capita terms, our salaries were falling down in real terms, and in dollar terms, so people were very tired and angry, and they were feeling that kirchnerism was not a solution, but then Macri was not, was neither a solution, and here is this guy, Javier Millet, who is an economist, who is very crazy, who I don't understand too much what he's saying, but I think he knows what he's talking about, right? And then came the four years of Alberto Fernandez, the pandemic, the lockdowns, and the lockdowns, they were terrible for people, but they were, you know, like this very good in terms of everyone valuing freedom again, because like, now we don't even have any, our freedom, I can't even go out and work, you know, and I think that people are from the, you know, from, it reminded them of what freedom was like. Exactly. Exactly. We had, we had to lose it. Suddenly everything was gone. Suddenly all freedom was gone. Exactly. And that gave Alberto Fernandez a very good image for a month and a half, two months maybe, but then people started thinking, I'm not going, I'm not going to work, I'm not being, I'm not getting paid. Of course, if you were, if you work for a multinational company, you were fine, but, but what if you had to work in the train every day, selling, you know, whatever you can sell? That was a different thing. And that's how Millet, this crazy economist criticizing everyone, became what we in Argentina call transversal, it's up and down. I mean, Millet is popular in the high class, let's say, people, wealthy people, but he's also very popular in the working class, if we can use these categories, right? He's very popular among people who are low earners, middle earners, high earners. And that, that, that's a very interesting phenomenon. And with all these very openly libertarian ideas, right? Because when he started criticizing Macri, now he would use all the Austrian arsenal, right? And, and Hayek and Mises and, and when the pandemic came also, right, talking about freedom and Ayn Rand, etc. So for us, and I'm talking personally now, being in the libertarian movement for, let's say, 11 years or maybe 15 years now, it was such an interesting phenomenon to watch. I would call this libertarian populism, right? Because of his approach. Millet was a politician, even before he decided to become a politician, because he was talking like a leader, like he has a message. And he had, and people started saying, well, make it an action, you know, go, go, go, and I will vote for you. I want you to, to guide, you know, typically a message like that. Most people would ignore, you know, in most countries in most, most circumstances, he'd get the, you know, 10%, maybe 20%. But that would be it. How did he go from, from being this outrageous commentator on television and radio to getting what 56% of the vote? I mean, he won by a significant, you know, significant majority. Yeah. Well, he did. And that's a very interesting question, because it helps us explain, explain also some of his, let's say, pragmatism once he came into power. Why? Because Millet became, you know, this charismatic, libertarian populist leader. And at the first election we had last year, it was a primary election. It's mandatory. Every party needs to do it. It's mandated by law. So he was not challenged by anyone. He has a party and he's the only, he was the only presidential candidate of the party. But he also, but he has to go to the elections anyway. So the primary becomes a huge, a huge survey on opinion. Yeah. And what happens to him? He became the number one. He got 30% of the votes. And then came the other parties. Every single candidate got less than 30% of the votes. There was Sergio Massa from the Peronist party. And there was Patricia Bullridge and Horacio Rodríguez Lareta from the center right party, which was the party of Macri, which is all of this is, it's a thing to take into account in itself. Because if you think of 2011 in Argentina, 2011, Cristina Fernández de Kirchner wins with 54% of the votes. In the first round, second to her comes a guy from literally the socialist party. 17% of the votes. So you have 54 and 10 is 64 and 7 is 77% who was either a hardcore left-wing populist or a socialist. What's happening today in 2023? You had the Peronist vote. They had around 37% in the first, in the primary. And then you had 56 or 57% of a very libertarian candidate and a center right party. So something happened during these years besides Millet, which turned the Argentinian population more anti-Kirchnerist, more far. We went far away from socialist and interventionist ideas. And we went closer to center right, a bit free market idea. So that's something to take into account. Then the first round happened. And then Sergio Massa, the Peronist candidate, got, I don't remember now how many votes, but let's say 36% of the votes. So now he was number one. And then came Millet with 30. So he didn't he didn't gain any vote between the primary and the first round. And then came Patricia Bullridge with around 26% or 23%, I think. And then a governor of a province in the center of the country, which is Córdoba, it's a very important province, 7%, important 7% there. He's a Peronist, but he's a center right Peronist, right? So then the 56% can be explained because of this, the rejection of Peronism. We don't want Cristina Fernandez de Kirchner. And we don't want per candidates. And Sergio Massa was a candidate for Cristina Fernandez de Kirchner. And that's how the 30 points of Millet remain there in the second round in the valotage. And he gained the ones from Patricia Bullridge and some of the governor of Córdoba. And that's how he became the president with 56% of the votes or 40 million votes, which is the most amount of votes that anyone got so far, right? And you were implying that there was some pragmatism there that he maybe cut a deal with these center right candidates in order to get those votes to moderate some of his more radical views? I think that it was kind of inevitable. I don't know if he thought of these coldly before the second round, but maybe after the events, you know, 26 points are, you're renting them, right? Or someone has lent them to you. And it has given it like this. I mean, things happened like this. In the campaign, he was promising, let's say, bigger cuts than what you can see now in the official proposal. He was proposing a dollarization, which I'm not saying he's not going there any time in the next year or in 2025. But no one's talking about dollarization now. Now there's a central banker. There are no transparent plans for dollarizing. We only have like a stabilization plan on the way or something similar to that. And many of the economists who were there with him, they are no longer, they are not a part of the economic team of his government. In his economic team, he has the former minister of finance of Mauricio Macri. So I'm thinking of that when I say he became more pragmatic, you know, and his fiscal proposal, 57% of the adjustment is spending cuts. But 43% of the adjustment is a more income. So not that he's raising taxes, although he did raise two of them. But he's also, this is funny, he's putting in place a tax that has been, let's say, reduced three months ago because of a populist strategy of the peronist minister of finance. But the funny thing is that him, as a member of Congress, he voted in favor of reducing the tax, which is totally logical. But now he needs to reinstate the tax because of our fiscal crisis, right? And that's pragmatism, that's politics, right? You can't do everything. Or you can't do everything you want, at least not overnight. So what's your assessment of the package he has put together? And some of it needs to be approved by your parliament. I saw today that the court has halted the labor reforms, which seemed like pretty important. So what's your assessment of the package and the potential for it to pass to actually get implemented? So there are three parts there. The first part is what I was talking just now, this fiscal package, which is 57%, spending cuts, 43% more tax collection. One of the tax parts needs to go through Congress, which is basically reinstating this tax that has been eliminated or reduced three months before, three months ago. So that needs to go to Congress. So that's one part that is here, but it impacts the third part of this three-part plan that Millay launched. The first part, the fiscal plan. The second part, it's a decree. We have this legal figure here, which is the urgently needed decree. It's like that, urgently needed decree. Of course, urgently needed decrees had been used and abused by every government to do everything and whatever they wanted. And of course, to put in place many regulations and socialist measures. And of course, libertarians, non-libertarians, regular politicians would often oppose to this decrease because they argue that some measures should go and they need to be discussed in parliament. So I completely understand that point. So here's the problem. Inside that decree, which is in terms of its content, I love every part. It's a massive deregulation of the economy in terms of the labor market, in terms of prices, in terms of fishing regime, fishing duties, in terms of airplanes and the aerocommercial sector, in terms of tourism, in terms of the way we organize soccer. I mean, everything is going or wants to be deregulated by this decree. This decree is now in place. And one last thing, rent is completely deregulated now. Of course, it's regulated by the civil and the commercial code, but there are no laws, specific laws regulating rent. So it's very ambitious. And it's in place because the legal amount of days passed and now this decree is the law. However, as you mentioned just now, yes, the judges can rule at least some parts of the decree out of order. And due to some presentations that labor unions, some important labor union did, that just it said, all the labor market part of the decree is now in standby. We will put it in standby and we will wait for the court to decide whether this decree is constitutional or not. So that's one obstacle, right? Yep. And this obstacle, which is present here in the labor market, could extend to many other areas of the decree. So that is, of course, a question mark. I don't know if it will pass or how strong and how fast will the justice be in order to block the changes, right? And there comes the third part. The third part is a law, it's a law project, which is also aimed at deregulating many other sectors of the economy, reducing some taxes in the long run, but also reinstating some of those who were eliminated a couple of months ago. And also changing things that are very important in terms of education, etc. So it's another very ambitious law project with many different subjects inside, and that has to go through Congress. And in Congress, you know, the government will need to have the ability to say, okay, I will lose these battles, but let's make sure I win these others, right? So that's the scenario today, at least. And in terms of Congress, how much support is there? So he has Macri's party, but who controls Congress politically? Yeah. It's a total chaos now. So Millay has a party, but he has around, let's say, 38 or 40 deputies, deputados, I think the deputies, members of Congress, one chamber of Congress. But there are like 270 or 250 deputados. So he has a very low minority there. And then there is the coalition that got Macri into power, but the coalition has broken because that coalition had people who were very free market oriented politicians, very free market oriented politicians, some were even far riter than just free market. But others were kind of social democratic, you know, and not, they don't really believe in liberalization, in the order of a market economy, they are much, they believe in the role of a very important regulating role for government. So it's another, it's a question mark what's going to happen in Congress. But I wouldn't say he will lose all the battles. No, he will not lose all the battles. I think some reforms will happen. And still we need to see what happens with the decree because as I was saying so far, the decree is now ruling. For example, if I want to rent your house, I don't, I don't, I don't go and read it. Yes, no rent control anymore. I can sign a paper with you that says I will pay for the next seven months. So no, no time limit, no three years, no two years, seven months, I will pay in coins of gold. And if you sign it, and if I sign it, that's valid. So, and that, that's, that's, that's happening now. So if there are no, if the justice, if there are no judiciary claims there, of course, there is a process in which the Congress has something to say about the decree. I think it has like 10 or 15 more days to say something. But if they don't say anything, then the decree will, will, will, will continue. It's valid. Yeah, I mean, a lot of this is, is dramatic and revolutionary to fix Argentina's economy, at least to get it out of the mess it's in right now, to lower those inflation numbers, to get it on a, on a reasonable path of economic growth. Is this enough? Good. Yeah. So I think that that's also a very good question because in these three areas that I, that I tried to, to put the second two parts, the big day regulation and changes in education, et cetera, I think those are structural changes, long-run ideas for the country to grow, to become very efficient, to become very productive, and to make us rich, like seriously rich, in 20 or 30 years. And I think if those ideas became the law, I'm confident that that will happen. But what do we need to reduce inflation? To bring a bit more normalcy, stability at least for Argentinians. Then we need the first plan, the fiscal adjustment and the liberalization of prices, which is also included in this first path because, for example, the dollar has been devaluated. I mean, well, the peso rate to the dollar, we are paying officially the official market, the official rate for the dollar is now 800 pesos. It used to be 350. Of course, there is a black market rate for the dollar, which is around a thousand. So the difference is still not zero. Should be zero, we should have like a totally free market for the dollar. But we're getting there. And now in these two months to come, or three months to come, we will see the impact of the liberalization of some specific prices in the economy that can be deregulated without decrease, without loss, just by a resolution by the Minister of Finance. We are seeing the dollar, the official dollar went up. Medical insurance fees are going way up. Food in the supermarket is going up. And gas in the gas station has gone crazy up, like more than 150% in the last month. But that's because we had an extensive and very, it lasted very long, a system of price control and price cap caps. And the economy was not tolerating this anymore. I mean, we had gas shortages. All the medical private system is not working well. We have shortages of doctors. There's a lot of people waiting in the private hospitals. And that's all because of this sin system of interventionism. So we will have a huge burst of inflation in the coming three or four months. But then they have the fiscal plan, they are balancing the budget very aggressively like no government did before. They are freezing the amount of money being printed to finance the deficit. And I would say that in two or three months, they will even give us a monetary regime, I would say a fixed exchange rate or even a path to dollarization, something like that, that will be even better for expectations towards inflation. So I think that inflation will start going down quickly as soon as we pass these three or four months of adjustment. So you still expect him to suggest, you still expect him to propose dollarization or something similar to dollarization? I think he will do it. It's a hard question to answer. It's a very hard proposal from his campaign. But also this pragmatism and these new people coming to government were not the ones who were there from moment zero. And they didn't like dollarization in the first place. I mean, nobody else than Millay and his party is in favor of dollarization. So there's a dilemma here between Millay, the demand, the ideologue, the libertarian, the one who thinks that the truth solution for inflation is the elimination of the central bank, the Austrian economist. There's a dilemma. There's a tension between that guy and the guy who needs to run a country with a coalition in which no one believes in dollarization. But I need also to mention that his minister of finance, he's not an openly detractor of dollarization. There was a famous paper that he wrote in the private sector in May last year when, even though he didn't actively defend the dollarization and wrote that it had many problems to be implemented, that he didn't think that it was a crazy idea. And that given the circumstances of Argentina, we may explore the idea. So if that gets together with the Millay that wants to really eliminate the central bank, I'm thinking that what can happen is during this month, there is a transition. The government devalued the currency. Now the central bank is being able to buy dollars in the market. They are accumulating some reserves. And one of the problems of dollarizing according to the now minister of finance was you don't have any dollar. How can you dollarize? But what are they doing now? They are getting dollars. So maybe they are getting dollars in order to dollarize. And I think one of the first things you could do in order to dollarize is to fix the exchange rate. Let's say in three months, the exchange rate is 1300 pesos to a dollar. Well, you can fix it there and then you get some time in order to get more dollars and then you dollarize. So I don't know. I don't know what's going to happen, but I think it's a possibility still. And I guess they also have to renegotiate a lot of the debt, the dollar-denominated debt that Argentina has with the World Bank and... With the IMF. Yeah, IMF, sorry, the IMF. Yeah, with the IMF. But here's the funny thing with the IMF. The IMF was asking the Argentine government to achieve in 2024, I think it was a budget deficit of 1% of GDP, a primary budget deficit of 1% of GDP. If Milay fiscal plan succeeds, we will end the year with 2% surplus. So Milay plans are much more ambitious than those of the IMF. That's why the IMF is so happy. They're like, oh, yeah, go ahead. That's fine. So yeah. So do you have time to take some questions? We've got a few questions here. Yeah, go. Okay. So Liam asks, even if Milay is the real deal, what chances does he have of passing even half the reforms he wants through the Argentinian legislation? So I think you answered quite a bit. Yeah, we kind of answered it. It's the hard question to answer. 50% of all the ideas, it would be a lot though, because I mean, just to put it in numbers, the decree, it kind of deregulates around 300 laws. So it changes 300 laws. And the law, the law project, another 300, it has like around 300 articles. So it's a very ambitious plan. So if you get 50% of that, will be much better. Mary Ellen says, what would be the reason for dollarization? And what do you think the impact would be if dollarization happened? Yeah, the reason will be today, the reason is crazy levels of inflation. In four months, maybe inflation will start going down. And you will ask, well, you don't have crazy levels of inflation. Or even though you have them, inflation is going down because you're not adjusting any prices. And because the fiscal plan is getting its results. So why would you dollarize? And one can think, I want to dollarize, I want to shut down the central bank of Argentina, because when me, me lay, I'm out of office, I don't want anyone to have the capacity of getting back with the process of printing pesos and creating high inflation, et cetera, et cetera, et cetera. So in order to avoid watching that movie at all, again, then I reformed the central bank, I closed it and I dollarize. So that would be kind of the structural goal of implementing dollarization. And what do you think would be the impact if it happened? Oh, I think inflation will go down. And we will have inflation in American levels. And if that's not enough, then everyone will be free to use gold or Bitcoin or whatever they want. That's now in the law because of the decree. So the law says now you can use any currencies, any legal tender. Contracts are free to be decided among the parties in the contract and currency is one of the freedoms you can choose. Yeah. Great. Ian says, some have argued that me lay should have cut taxes first rather than cutting spending. What do you think of that as an Austrian economist? As much as I like the idea of cutting taxes, I'm going to say this. When Sergio Massa, the former minister of finance in Argentina three months ago, he decided that 800,000 people will not pay income tax anymore because of his policy, his proposal. I oppose that. I think that's totally irresponsible. Yeah. I mean, cut spending before you need to tell me where you're going to cut spending before you reduce taxes, because even if we can think of the Laffer curve and reducing taxes will give you more tax collection, well, yes. That only works at a top marginal rate. It doesn't work on the whole. Yes, of course. And we cannot predict in such a perfect way in which you say, okay, so this will be self-finance. Every time a politician says, this is self-finance, it is not self-finance. Do we have problems with spending? The real problem is always spending. And also, yeah, that's the main thing. The problem is spending. So you need to reduce spending. Even if you want to reduce taxes or not, you need to reduce spending. That's the main problem. And the problem in America is Republicans always cut taxes and increase spending. Yes. And it's always a disaster as a consequence. And the debt ceiling, right? It's always higher. That's going up and up and up and up. We're not quite, you know, we're not quite Argentina for a variety of reasons, but you're trying. We're trying very hard. Right. Let's see. Ed says in America, government worker unions are very strong. Are they strong in Argentina? How will Millet deal with government workers' unions? Yeah. I would say they are even stronger. And these are the ones who are now opposing the most, the reforms. And they gained this measure by the justice, which is saying we will put the decree in standby because these reforms in the labor market can't or should not be done by decree. That's something to be discussed, right? I mean, some other judge will need to decide if it is constitutional to change the labor market by decree or if you need a law or if you can change the labor market at all. But unions are very powerful. They are big, but also they have the worst image among society. If you do a survey, nobody trusts them. Nobody likes them. We have the same union leaders that we had 30 years ago. They have no legitimacy, but still it's hard to change what touches their interests. It is still hard. So Caleb asks, he says repeated financial crises and economic stagnation started in 2007 were a global phenomena, only deferring in degree. How would individual domestic physical and financial policies be the primary cause? I don't think I understand. It didn't really matter what particular governments did. The whole thing is a global phenomena that governments can really control. Well, I will not answer for the whole world. I will focus in Argentina, which is what I know. And maybe a little bit of Chile I want to mention also, but we had really reckless policies. I mean, government spending went way up in Argentina. Deficit finance was totally reckless. Money printing was totally reckless. And the consequences are here. We can see them every day. And we have been witness of this for the last five and 10 years. And recently I read a paper on Chile, an abstract I have to read completely, where they also state that in Chile they had this last decade. The last decade was a lost decade, sorry, the lost decade. And they also blame government policies and uncertainty regarding property rights because of these constitutional ideas. And then the former government going back on private investments, etc. So they try to demonstrate that government is to blame in their own lost decade. We also had a lost decade, right? And here is much clearer that the government is responsible for it. Yeah, I mean, I think the idea that this is global is wrong. It's global in a sense that every government in the world did the same thing. So they got the same results, but in different proportions. But some countries didn't suffer from the same phenomena that just behaved better from both a monetary perspective and from government spending perspective. Israel, for example, has not gone through the same business cycles as the rest of the world has. Partially because they just for whatever reason engaged in insane monetary policy. And for example, Greece was a lot worse than Germany coming out of 2007. So some countries did better relatively speaking. All right, quickly, let's see. Did Mille fight the left and right equally in his election on his road to becoming president? Or did he show more anger against the socialist? I would say he showed more anger against the socialist. The urgent problems in Argentina are economics, economic problems, inflation, low wages, stagnation, crime, insecurity in the streets, not as terrible as in, let's say Central America, but it's a sensation. It happens, you know, there's robbery, there's kidnapping. And it's going, it was worse than it used to be. So in those areas, it's like libertarians and also people on the right, they tend to agree that what is needed is more order, right? Either it is order on the streets or order in the economic sphere. So I think that's where Mille stands, even though he's very libertarian, or he says he claims to be and in personal or family terms, he doesn't follow the traditional idea of the more conservative political specter. But still, I think his support comes not only from libertarians or center right, but also from people who are very far right, right? And they are willing to tolerate this eccentric libertarian economist. Yeah, just to avoid the left, exactly. Yeah. Marialine asks, who is in the picture behind you? Well, this is Hayek. Yeah, this is Hayek over here. And this is Ludwig von Mises over there. So two Austrian economists, I really admire them. So they are always here. Frank says, what can Mille's mandate help him to achieve? What are these mandates going to achieve? I don't know which will he finally achieve and which ones will he not. But I think that we at the end, if we get a country with let's say not lower levels of inflation, but a normal inflation and international level inflation, a bit an economy that is more open and an economy that is more flexible, I would think that that's that's awesome. That that's that's good enough. But also I would love that in eight years, a socialist wins because that it will happen, you know, the left wins sometimes the right wins other times. But this is what I want, when the left comes back, comes back into power, that they don't even think about printing money, that they don't even think about expropriating companies, that they don't even think about nationalizing. I mean, of course, they will come and they will try to do more redistribution. And we will oppose that. But please stop with the craziness, do the basics. Yeah, stay with some basic limits. Right. That's that's what that's my biggest goal for the future. I hope Milley presidency gets us in the way to that. Okay, two last questions. So Kim asks, has Milley changed the culture to more freedom oriented? Or is this just a temporary thing you think? No, I think I think he is a cause, but also a consequence. So he has changed the minds of many young people, no doubt about it. And through the young people, why not parents or grandparents? Of course. But he's also the consequence. I remember traveling or visiting other countries, visiting libertarian friends, free market friends abroad, and they would tell me before Milley existed, how is it possible that you guys in Argentina have so many great free market thinkers, liberal thinkers, economists, etc. Why is Peronism so prevalent, right? Or so hegemonic, right? And I think that those thinkers were there, they were doing their work, they were teaching and talking on YouTube or going to the media or writing books, etc. And that also helps people who were tired of curtenerism, because curtenerism was no longer giving results. And that created some culture in order to embrace love or let's say adore, admire a person like Milley, right? So it's cause, but it's also consequence. So Kim asks, what are your thoughts on hedge fund managers, Paul Singer and Elliott management company? The left and right seem to think that what they did to Argentina was unethical, was bad, that he bullied the government? No, not at all, not at all. If they didn't exist, bond holders would be in a worse position, because what these people do is they buy the bonds when nobody else is willing them. And they have the legal weapons and the back and the money to be able to wait and take the chance to get a favorable, to get a sentence on its favor. But it's a risk, they could get a sentence against. So I don't think it's unethical. What is unethical is to do deficit spending thinking like there's no tomorrow and saying, oh, I'm sorry guys, I'm not gonna pay. And then when people come and say, you signed this paper, you need to pay, I say, like Christina Fernandez the Kirchner said, I'm not gonna pay, no matter what the judges in the United States said, because that's what happened. I think that's even more unethical, that's unethical. The other thing is perfectly fine, no problem with that. Great, Yvonne, thank you. I know you have to run. I appreciate it. I think we're gonna be in Buenos Aires in April, first week of April. Hopefully I'll get to see you in person, that'll be fabulous. We're doing, I think we're doing a conference there, since Latin America is doing a conference there. I'll be speaking, so that'll be a lot of fun. So thank you, really appreciate it. And I'll see you in April. Perfect, perfect, perfect. Excellent. Have a good winter there, I think. It's summer here, so. It's always, it's summer in Puerto Rico, but it's always summer in Puerto Rico. That's so fun then. Well, enjoy the summer, let's see each other on YouTube. Bye, thank you. All right, guys, you guys can stay. I'll be, we can go on a little bit, a little bit longer. Yvonne, needed to go, so we can stay and talk a little bit more about Midele or about anything else you guys want to talk about. Yeah, just a reminder to everybody, I will be in Buenos Aires. Those of you who are in Argentina right now, listening, I'll be in Buenos Aires in, on the first week of April, I think towards the end of that week, we will be in Buenos Aires for two and a half day conference, I think. I'll be speaking there. There'll be, we'll have a couple of other speakers with me. It'll be a deep dive into a number of different topics in objectivism. So I'm looking forward to that. Of course, not our first time in Buenos Aires. I like to think we have had a little bit of an impact on kind of the, the more pro-freedom attitudes in Argentina these days. A few, we've got a few more comments here. Batista says a thousand Argentinian pesos, he says just a dollar, getting a buck in Argentina is getting harder every day. I've been a follower for more than a year and I'm really grateful to have a fellow Argentinian in the show. By the way, I'm also Jean Batista. Thank you, Batista Juan. Let's see, Harper says dimming the lights in the background is so much better. There's a big debate about that, you know, a significant, a significant, significant challenge. Jean says, great interview. I'm excited to watch Argentina get rich and prosper. Thanks, Yvonne and Yvonne. Me too. I'll talk a little bit in a minute about what I think is going to happen. Kim says thank you. I appreciate it. Kim and Joss says great chat, looking forward to sharing this. Yeah, I think that was great. Yvonne obviously is a libertarian economist in Argentina. And I think what he described to Amile makes sense to me. And I think the challenges that Amile faces are going to be with the courts and with the Argentinian Congress and what he can get past the Argentinian Congress. I was disappointed when I saw who he elected as finance minister and the fact that his more radical economists that had surrounded him during the election were not actually part of his economic team once he won power. And I was a little worried that he would compromise some of his more radical views. I'm still worried about it. In particular, I'm worried that he won't dollarize. I think dollarization is difficult for any country to do. There's a certain patriotism and pride associated with having your own currency, which I think is misplaced, of course, but I think it exists. I remember in the 80s Israel had close to a thousand percent inflation or was living there. And finance minister proposed on television one evening to dollarize the Israeli economy. By noon the next day, he was forced to resign. That is, it's a very difficult proposition to tell a country to give up its own currency and in a sense be from their perspective, not from an economic perspective and their perspective dependent on another country. Of course, the fact that he is allowing contracts in any currency in a sense eliminating kind of legal tender is a huge step in the right direction and in a sense a way of getting around the peso anyway. So maybe he's prepping the ground. Maybe he's preparing for dollarization or for some kind of currency board, a fixed exchange rate like Hong Kong has, which has worked pretty well for Hong Kong. Ideally, of course, you don't dollarize. You go on some kind of gold standard. But that, of course, is even more radical and more controversial and less likely to be, to be dollarized is to be dependent on their Federal Reserve. Granted, the Federal Reserve is probably better than most central banks in the world. Doesn't make it good. It just makes it better than other central banks. So it's still not, it's still far from ideal. It's still nowhere close to where the kind of economic system we should have, kind of monetary system we should have, which should be basically a free banking system, which allows banks to issue currency based on whatever reserve they want and whatever the market will tolerate. I expect that to be gold in the end. But if Bitcoin is so cool and so great, let it compete. Let's have monetary competition and see which currency, which form of money wins out. I expect gold to win out. But I'm open to the idea that something else comes along that is better than gold. But rather than that being dictated by some monetary central planner, that is what should come about through a market process, through competition and through the preferences within the market. What else do we say about Argentina? I know some of you were asking about the religiosity or the extent to which Argentina still has a Christian altruistic perspective. Having visited there and other Latin American countries quite a bit, there's no question that religion plays a big role still in Argentina. Even among free market thinkers, many of them are quite religious and that, of course, opens them to the pull of altruism. And altruism ultimately leads almost inevitably to greater government intervention and to greater socialism, to greater redistribution of wealth and regulation, to protect us from those selfish, self-interested businessmen. So it's even if you're a relatively free market person, economist, altruism provides undercuts all that and makes it very difficult to defend those positions in a relatively religious altruistic culture. And Argentina certainly still has that, still has that kind of a religious culture there. Now it is good that Millet identifies more with Judaism than he does with Christianity these days. Judaism is less altruistic, doesn't have the similar amount, doesn't have kind of the worst elements of altruism. The Christianity does, it would be even better if Millet was an atheist. But you're not going to get everything, we'll take him being a free market economist and see how far we can get with that. But it is a challenge of course in a culture, to what extent will freedom stick? Will the idea of freedom stick? And part of it is how successful he's going to be. But even success, look at Chile, even success does not guarantee that the people won't turn against it when their altruism kicks in, when bad philosophy catches up with them. You saw that in Chile. Now Chile, they've kind of reverted back to kind of a status quo, but they certainly came very close to going far left and to adopting a far left constitution. Luckily, they avoided it. Justin asks, can Bitcoin save Argentina? I don't think Bitcoin in and of itself can save anything. But I don't see why Bitcoin would save Argentina. I mean, the dollar could save Argentina and it depends what it means by getting rid of the central bank in Argentina would save Argentina. And then in a sense, people could choose if they want to use the dollar, they want to use Bitcoin. But the reality is that Argentina doesn't need Bitcoin. Bitcoin is unusable as money. Bitcoin is unusable as money. It is unbelievably unstable. It goes up in value constantly. If I'm selling you something for Bitcoin, why would you give the Bitcoin up if you expect the Bitcoin to go to 100,000 tomorrow? Or why would I want to accept Bitcoin if the fear is that Bitcoin might go to 10,000 tomorrow? So Bitcoin cannot be money, cannot be money until, if ever, it price stabilizes on a particular value in terms of its purchasing power. And I don't see what the mechanism for that stabilization, I don't see how that mechanism comes about. So I mean, I can imagine that happening, but we're far away from that. It would basically have to be universally adopted as money. Only then would its purchasing power stabilize. But right now, it's unusable. It literally is unusable. And that's why almost nobody uses Bitcoin to transact. What people use Bitcoin for right now is a speculative asset. It's people buy it and they hold it. I don't know anybody who sells their Bitcoin. I don't know anybody who or some people do sell their Bitcoin, obviously because there's trading going on. But most people own Bitcoin, just hold it. And they don't use it to buy stuff. They just buy and sell it. They speculate in it. So it's a speculative asset linked to the belief that it will become money one day. I don't happen to share that belief. But all right. Yeah, so my view of me today is I can't imagine anybody better being elected in the world right now. He combines what seemingly is a real knowledge of economics with some political savvy with really good foreign policy. I don't know if you know, but I think it was yesterday or today, Argentina announced that it would not be joining the BRICS. I mean, that's fantastic that Argentina is not going to become part of the statist access of Russia, China, you know, in South Africa and Brazil. And we'll stay kind of independent of that access. I think that's a great decision for Argentina to make. Ed asks, can you imagine a politician in America saying I want to do away with the Federal Reserve? I can't. Neither can I. It's unimaginable. But even more philosophically, can you imagine a politician talking about collectivism and individualism in the way in the way Mille has. Yeah, Chuck says Juan Paul did and Juan Paul did call for, you know, call for end the Fed for a while. And then it was basically audit the Fed, which is what, which is a pretty watered down, watered down version. Who the hell cares about auditing the Fed when we should be getting away and getting rid of it. But yeah, Juan Paul had it for a while and he couldn't get, he couldn't get above, you know, what was it? I can't remember 10%, 15% of the Republicans, never mind of Americans more generally. So it's, it's, I think the bigger issue is the individualism versus collectivism. The fact that Mille is willing to talk in those terms, discuss issues in those terms, frame the whole agenda and the whole issue in those terms. I think that's pretty revolutionary and pretty exciting to see. So yeah, go Mille. Let's hope he is incredibly successful. I wish him and the Argentinians all the best. I think as, as Ivan described, the, the program that they have put together is the right program. Let me just say this to a question we got earlier. I, I think I do not think the first thing you would do is cut taxes. I think the taxes is the last thing in many respects. The last thing you do, the first thing you do is cut spending and cut regulations. You cut spending and cut regulations. And if you're going to do anything with taxes, I would say you simplify taxes. The real goal should be to simplify taxes. But really, even before that, and where you should put most of your political energy and cut spending and cut regulations, get the economy going, get, get, get, get, you know, the, the, the, the profit motive and, and markets functioning. And, you know, get rid of all the distortions of taxes in that sense, simplify them, get rid of all the subsidies and get rid of government spending, which is massively distortive, massively distortive, primarily on things like subsidies and all kind of, all kind of programs like that. I think, again, welfare is the, you know, pure welfare to put people is the last thing I was cut. I would cut everything else, starting with business subsidies, filing aid, which is a small amount. But, but for example, one of the first things you would have to do in the United States, I don't know what it's like in Argentina, is you would have to do a major reform of social security, Medicare, Medicaid. You just can't do anything in the United States until those programs shrink dramatically, dramatically because they constitute such a large percentage of government spending. All right. I hope you enjoyed the interview. Thank you for those of you who supported the show. I will see you all tomorrow morning for another news roundup. And then again, on Saturday, Saturday, we'll be doing two shows. For those of you in Israel, we'll be doing a show in Hebrew on Saturday morning. And then Saturday afternoon, we'll be doing a show, a regular show, I think. Oh, it's an AMA. On Saturday, we have the AMA. Don't forget, these shows are contributed, supported. They cannot exist without your financial support. You can do that through the super chat here or through a sticker, as we sign out, or you can do it through a monthly contribution on subscribe star, Patreon, or PayPal on your own bookshow.com slash membership. So please support the show, make this possible, and I will see you all tomorrow morning. Bye, everybody.