Are politicians brave enough for daredevil economics?
stark choice in the second round of its presidential election on November 19th. Sergio Massa, the current finance minister whose government is presiding over inflation of 138% and a bizarre system of various official exchange rates, is facing Javier Milei. Mr Milei is a libertarian who says he wants to tear down the system, borrowing ideas from Friedrich Hayek, Milton Friedman and other free-market economists.
Yet whoever wins, reformist Argentines doubt the country will truly change. In all likelihood, Mr Massa would double down on money-printing; he has little interest in dismantling the system of patronage that makes sustained growth impossible. Mr Milei, by contrast, would have little support in Congress.
He has no experience of implementing policy. Many of the market-oriented economists sympathetic to Mr Milei, and even those who advise him, have surprisingly vague ideas about what Argentina needs to do to improve its economy. The country feels stuck.
Argentina is an extreme example of a wider trend. The world has forgotten how to reform. We analysed data from the Fraser Institute, a free-market think-tank, which measures “economic freedom" on a ten-point scale.
We defined “daredevil economics" as when a country improves by 1.5 points or more—a quarter of the gap between Switzerland and Venezuela—within a decade, therefore indicating that liberalising reforms have been undertaken. In the 1980s and 1990s this was common, as countries formerly in the Soviet Union opened up, and many deemed unreformable, such as Ghana and Peru, proved they were in fact reformable (see chart 1). Politicians changed foreign-trade rules, fortified central banks, cut budget deficits and sold state-owned firms.
Read more on livemint.com
