Argentina’s Milei, in Overseas Trip, Visiting Countries That Are Emerging Democratically From a Debacle of Socialism

Can it be but a coincidence that the Argentine economist-turned-president is stopping at Rome and Jerusalem?

AP/Leo Correa
President Javier Milei of Argentina visits the Western Wall at Jerusalem's Old City, February 6, 2024. AP/Leo Correa

The president of Argentina, Javier Milei, will travel to Italy from Israel on Friday to meet Prime Minister Meloni. What can one suppose the two leaders will be talking about behind closed doors? 

Argentina’s foreign minister, Diana Mondino, gives a preview in an interview with Italy’s most read newspaper, Corriere della Sera, urging him to “focus on the trade aspects and the reintegration of Argentina into the world” economy.

After 30 years of economic stagnation in Italy, Ms. Meloni has tried for the past year to revive its economy. Ms. Mondino says Italy and Argentina have “many similarities”  including the importance of “attracting new investments.” Mr. Milei, she adds, “must cut public spending and at the same time increase spending to support the poorest classes.”

The Italian economy has recovered steadily since the Covid pandemic, but the pressure on Ms. Meloni to raise taxes grows in tandem with rising debt. Ms. Meloni deserves credit, though, for improved manufacturing productivity, per a Washington Post analysis.

In 1992, the Maastricht Treaty imposed a legal and policy “superstructure” which, Dutch economist Servaas Storm argues,  Italy adopted more strictly than other European nation. Italy, Mr. Storm contends, “paid heavily for this.” He suggests that “fiscal consolidation,” along with “persistent wage restraint” and an “overvalued exchange rate” served to damage “Italian aggregate demand” which in turn “asphyxiated the growth of output, productivity, jobs and incomes.” 

Mr. Storm concludes that  “Italy’s stasis is an object lesson for all Eurozone economies.” Ms. Meloni has been working to reverse those trends for over a year now, but seniority is ingrained in both the private and public sector. Mr. Milei will learn from Ms. Meloni that creating a meritocratic economy and incentivizing innovation and competition takes time

Ahead of Mr. Milei’s visit to Rome, he has been visiting Israel and meeting with, among others, Prime Minister Netanyahu. The Israeli premier, too, can sympathize with the economic predicament in which Mr. Milei finds himself. Mr. Netanyahu played a major role in steering Israel toward free market capitalism.

Mr. Netanyahu told Israel Hayom, “We just had a conversation about free markets.” He said Mr. Milei is “leading it in Argentina and we led it in Israel.”

For the first 50 years of the modern state’s existence, the labor movement dominated Israeli politics, with a brief intermission led by Menachem Begin and Yitzhak Shamir. It was Mr. Netanyahu, though, who, beginning as financing minister and later as prime minister, transformed Israel’s economy via free market policies to leave behind the legacy of trade unions and socialist kibbutzim.

Israel became an innovation hub, a start-up nation, by riding the coattails of Mr. Netanyahu’s enactment of tax cuts, deregulation, privatization, and welfare reform. 

President Milei is looking to turn Argentina into a start-up nation of his own, though the expedition will be treacherous. Upon his return home, Mr. Milei will be confronted with mounting divisions over his economic reform package.

The omnibus bill collapsed during its second round review when the lower congressional chamber, the Chamber of Deputies, could not resolve a dispute over articles detailing privatization of public companies.

The bill was sent back to committee, but Deputies are saying it is “politically dead.” This is the first time a government has rejected the first law of its administration, according to Argentina’s largest newspaper, Clarín

The setback will not necessarily stop President Milei. He says, in a tweet, he will continue “with or without the support of the political leadership that destroyed our country.” This reaffirms his statement before being elected as president that he will put the economic reforms to a popular referendum if the Congress blocks the legislation.

Although physically away from home, Mr. Milei is sending a message to the domestic opposition that economic reform will happen, his way or the hard way. Mr. Milei is looking to the future for his own nation’s economy by learning from leaders who have been in his shoes, fighting the forces of economic socialism. Argentina awaits Mr. Milei. Time will tell if he can put his worldly education into practice.

The New York Sun

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