Argentina's New President Wants to Adopt the Dollar as the National Currency
wsj.com
wsj.com
- he doesn’t have anything like a majority in the Argentine congress (in either house). I don’t know Argentine law and would welcome comments from someone who actually does but it would surprise me if this is something the president can do unilaterally.
- as a practical matter, Argentina itself does not have enough dollars to make this happen. You need a ton (more than that…) literally of physical currency to make this work. I don’t think their reserves are sufficient to cover it. (You need many additional tons of coins to make it practical too…)
Separately this is generally not a great idea economically. You do kill inflation in Argentina (replaced with American inflation but that is extremely low and stable by Argentine standards). But you have no control over your monetary policy or your exchange rates. If your economy is export driven to (e.g.) China, you now have to worry about the dollar-yuan rate, which is not under your control.
Of course this is also Argentina which is a particular basket case economically so I won’t rule out the possibility that this could be better than what they have now (or would have had under the loser in this election). But my guess is this would be worse if implemented.
For a country which produces a large number of really outstanding economists (including great macroeconomists!) Argentina is surprising disaster.
I'd assume that it's a disaster is why it produces a lot of outstanding economists.
(remember that an economist is someone that, if you ask him to study horses, sit down and think really hard "what would I do if I was a horse?")
In this book, Varoufakis, which was Greece Finance Ministry at the time, explains how he was tasked to negotiate with EU institutions and IMF to alleviate Greece debts. While he proposes restructuring plans after restructuring plans, nobody even try to argue with him on the plans. They all say that there should be a strong austerity, it is the way to go. At one point, he managed to get a glimpse of what is presented to him as a very complex economical model that he (phd in economy) could not understand and, by looking into the code, discover that it is utterly stupid: the whole agenda of austerity is based on the fallacy that you could raise taxes without affecting consumption.
You could say that my example is only saying that there are good and bad economists and that things go wrong when politicians listen to bad economists.
Well, it turns out that politicians only listen to bad economists (because that’s what they want to hear) which make any influential economist a bad one (because you can’t really make a career as a good one who say things like "give more money to the poor" or "tax the rich").
Varoufakis is an exception here but not so much: he was quickly removed from office once people understood that he would not agree to become a bad economists to stay in power.
That was Uni. Then I started read pieces by "economists" in the popular press. They written "pop science" style, where the science being discussed is economics. But where pop science is often a genuine attempt to educate, these articles by "economists" were invariably little better than opinion pieces. To this engineer they often read like near pure bullshit. Worse, after a while, it because obvious it was paid by the word bullshit. As in, if you look at the job description for "Chief Economist" at a bank it reads like a PR position, not someone paid to predict economic outcomes.
I do feel sorry for the academic discipline. The tarnish painted by the brushes held by the colleagues paid by politicians and PR services reeks, which in turn means they go through life wearing the snide comments you see about their efforts here. Balancing that is things like the current interest rate. If I believe what I read, the worlds reserve banks kept interest rates low because the worlds top economists told them the COVID cash bazooka would not lead to inflation. WTF? I have no idea if this was just another case of economists saying what they were paid to say, or it really was the underlying academic consensus. But the independent reserve banks acted on that advice, and if they can't pick the paid bullshitters from the those doing true research then I've got no hope.
Well, they just forgot one aspect: people are not rationales. They never are. The whole advertising business relies on people not being slightly rationale at all. There’s no even a point in making people rationales. And this is not always bad: people will sometimes act kindly despise their own interest.
The whole "people act rationally for their own selfish short-term interest" is what gave us most economical theology from Smith to this day (cheers to Ayn Rand for writing the fairy tales about it). It’s mostly as reliable as astrology: sounds mathematics applied on a completely false hypothesis.
And, yes, politicians have been using it exactly like astrology with similar results because one of the key principle is that it justifies the existence of rich people (those are who acted the more rationally and thus are rewarded. Did I say that everyone acts rationally? Well, yes, that’s the hypothesis. Don’t try to confuse me).
Just to highlight how far fetched mainstream economical "science" is, just consider that there is a new field called "behavioral economy". Behavioral economy introduces a whole new paradigm: "what if, instead of assuming that people are rational selfish, we actually observes and make theory from observations".
Which is, you know, what we call "science". And, unsurprizingly, every behavioral economist start to say thing like "hey, if we tax the rich, it works!" "hey, we can help the poor by handing them money". "hey, we should not let banks create money and then hand them the money they created and lost themselves".
It’s a bit like a few astrologists started to consider "what if really tried to look at the starts?" and invented astronomy. But every king, every government was laughing at them for being young and naives.
This is, as we all know, true to the "first order" approximation. We know it in business - you get what you incentivise - it's behind Goodhart's law (when a measure becomes a target, it stops being a good measure).
It is however, an incomplete description of human behaviour, again, as we all know. But since "second and higher" approximations of human behaviour are hard to model... they don't do it.
And just so you know, it's just as easy to do bad, "left wing", Lysenkoist economics.
The Argentina Paradox: microexplanations and macropuzzles by Taylor et al https://latinaer.springeropen.com/articles/10.1007/s40503-01...
Why do they need reserves? Abolish all federal obligations. Let the exporters accept only USD for their goods and allow them to figure out how it gets distributed through the Argentinian economy.
this would result in the country having no money to pay for a proper functioning goverment.
who is going to pay all govermental employees? the police, the army etc if the country has no reserve currency?
1. Retirements funds 2. Health care 3. Education
No program that seriously contemplates cost reductions can do without cutting back with these. Guess who the beneficiaries of these expenses are.
Note, India has its own currency and was able to print alternative notes. However, because the government, against all the advice from its economists decided to do this in secret, it did not have enough of the new notes to replace the old notes for at least a few months after making this decision.
This simple act, which only involved replacing old notes with new ones, in a currency that the Indian government controlled, led conservatively to tens of thousands of deaths, arrested economic growth in a fast growing country immediately, destroyed hundreds of thousands of businesses, and set the economy back conservatively by 5-10 years, although the significantly reduced growth in the subsequent years since (at least until the pandemic...it's likely the pandemic where India enforced amongst the strictest lockdowns in the world would have reset the economies in both cases) probably has a continued compounding effect on economic growth.
Of course, a large part of the damage to India was a result of the massive size of the informal sector relative to most other countries in the world and Argentine may not be anything like that, but I think it's a very relative comparison as to how easily such a transition can go bad if not handled extremely carefully.
Yet Modi is still in office. Amazing.
If Argentina actually had honest exchange rates they would have about the right reserves. However they are using a false rate for most and so switching will force them to use the real rates which would devalue specific things. (They have export restrictions on many products because they can't control the exchange rate)
Bonus question: Why not Euros?
Euro is far, also Euro is far more left leaning (I guess) than the US (even democrats in the US would be considered right form the center in Europe). But the real issue would be the lack of currency reserves - least I'd think Argentina might have more Dollar notes than Euro ones.
I don't know how this helps, though.
Argentina's peso ("left-leaning fact-based" currency) went from worth 0.35 US dollars to now 0.0029 US dollars in less than 5 years.
The elected president is on the quite right side of the spectrum, so associating with any left wing policies/countries would be very unlikely, given Argentina's currency dropped massively during the last years. He won vs a candidate who used to be a financial minister overseeing several hundreds percent inflation.
Technically, from a geography point of view, euro-using countries as official currency are closer than USD: https://eur-lex.europa.eu/EN/legal-content/glossary/outermos...
(I.e. French guiana's currency is the Euro)
The distance - far/close matters when it comes to the trading partners more than anything. The US and Brazil being the biggest ones[0], and the trade is in USD.
[0] https://www.indec.gob.ar/uploads/informesdeprensa/i_argent_0...
That used to be the case but it is true no longer, current 'Democrats' (between quotes because the DNC seems to be as democratic as the DRC from what I've seen) are comparable to centre-left parties in north-western Europe. The more activist wing of the 'Democrats' is comparable to socialist and communist parties in e.g. Sweden and the Netherlands.
Pro-Euro: Euro already is controlled by a wider range of countries and there is some incentive to match monetary policy to accommodate those wider circumstances. So a policy is less likely to just support a single countries unique situation and conflict with Argentina's situation.
Pro-USD: USD is already more widespread in South America and actively being used in Argentina right now. This advantage is very practical and concrete right now and trump's all else
I presume by Fed you mean the not-government 'federal reserve' which is a contractor to Congress which tinkers with monetary policy and sets the price of money. Federal Reserve quietly provided bailouts to Europe in 2008.
New York Times article,
'“an open facility where European banks could come and get dollars.”
So began what would become the biggest United States government bailout that most people do not know anything about.'
Argentina or Panama having a bit of an economic slowdown whilst the US is growing nicely isn't the Fed's problem: the monetary policy decisions will only take into account to the monetary policy needs of the US, and it's not particularly in the interests of the Fed to bail out Argentine bank reserve shortfalls unless the contagion is likely to hit the Us either.
this needs to be repeated. USD is already the way of doing business in the ARG, and this is essentially just calling it what it is.
this is also seen as a way to stabilize the back-and-forth economic choices that make the currency terrible.
makes sense in theory, but they're an export economy, and a strong USD will make it hard sell beef and mining products.
I've been in favor of abolishing the minting of physical US pennies, but I suppose this is one argument against it: other countries that use the dollar might actually find pennies to be useful.
Notes as money is bizarre share-cropping, and USA people would be reasonable to advocate for coins in larger denominations like 10 50 and 500 to avoid borrowing notes into existence.
https://www.usmint.gov/news/inside-the-mint/how-coins-are-ma...
"Federal Reserve Banks buy coins from the Mint at face value."
National debt is a primary tool to support growth.
Breaking glass windows also increases growth (or GDP) because it forces spending to replace the broken windows. Similar GDP increase when USA builds missiles to blow up bridges (over there somewhere) and later provides funds to US contractors to rebuild those bridges. GDP number go up, along with debt and interest costs.
Even if it's not recorded as such, money is always a liability to its issuer, otherwise there would be no point issuing it.
Not in USA. US coins are fiat without a liability. This leads to people every few years thinking they discovered that coins are just fiat and then recycling the idea of minting some $1 trillion coins and paying off the federal debt. It is technically possible, there would be no debt for the coin issuance, and would likely lead to nobody willing to purchase future USA debt issuances.
https://www.investopedia.com/terms/t/trillion-dollar-coin.as...
Really bizarre are the gift shops at the US Treasury's Bureau of Engraving and Printing where they have tours to watch the printing presses. They sell to tourists uncut sheets of dollars that they print. But they first buy the sheets at face value plus the printing costs from 'federal reserve' who bought the sheets at pennies per _sheet_ that Treasury just printed.
https://www.federalreserve.gov/aboutthefed/chapter-5-federal...
"When purchasing the notes, the BEP authorizes the Reserve Banks to charge Treasury's general account for the face value of the notes plus the cost of printing."
No, though prove me wrong and show us the coin liabilities on USA balance sheet somewhere.
In practice a coin is a token that represents a liability at the Fed much like a deposit. That token can be used to claim an actual deposit at the Fed (by agents, not little people, obviously).
I'm not aware of a law that requires a coin be bought by the fed at face value. It just seems to be the historical norm. If you're aware of such a requirement please let me know.
In summary, the coins are not the "money", they're just tokens that for historical reasons the fed buys from the treasury at face value and can record at face value in their balance sheet. It could in principle just as easily be the case the fed is not required to balance with anything from the treasury (e.g. not T-bills) against new money creation - they're just forced to hand over the deposits to the control of the treasury. The net effect would be exactly like the coin case (hence the trillion dollar coin nonsense).
It lasted about 10 years and was eventually abandoned. TLDR: "Simply put, the dollar peg overvalued the peso in the rest of the world, especially against a weak euro and the Brazilian real, reducing Argentina's competitiveness and compounding the account deficit."
https://www.statista.com/statistics/1331248/main-trade-partn...
Pegging to the yuan might be the more interesting option since that has considerable risk but also I’d imagine China would look very favorably on it.
https://es-m-wikipedia-org.translate.goog/wiki/Mercado_negro...
You can exchange dollars in any country and in many you can directly pay in stores if the storekeeper is flexible. You wouldn't call that a parallel dollar economy.
The only additional point in Argentina is thay they have an official exchange rate that is way way different from the true exchange rate (ie the one that arises from demand and supply). That's why you can exchange dollars through the official channels and get, say, 500 pesos, or you can exchange from an unofficial one and get 1000 pesos
This is Latin America we are talking about.
To be clear, I do generally agree with your comment. Just saying, don't be surprised.
Argentina is a country with great natural and people resources that was utterly decimated by a legacy of mismanagement and corruption going back to the Spanish era. Not something that is easy to fix.
On top of that, when over 40% of the population works, in some way, for the government the problem is much harder to fix. A huge percentage of these people are nothing less than parasites, in that they do nothing of value to anyone. How do you take a parasite whos skill set amounts to moving sheets of paper from one pile to the next and turn them into useful members of society? How do you do that when your industry has been decimated and you haven't fostered a more productive culture? It's nearly impossible.
I am not a economics person by any sort, but why does that matter? If China is buying say minerals at $4 a ton or something, versus 1415.41 Pesos how does that change. If US is strong and the Yuan dips, it now costs X% more to convert to $ then before, that just means you decrease price of export by X %? If we are speaking entirely on a 1 to 1 partner.
But on the plus side it also opens you up to buyers who trade in USD, they no longer need to trade to a bunch of Peso first. And since most export companies probably already accept USD for trades, I don't see what the negative is.
I ask because I lived there for 5 years, and anytime I sold dollars for pesos, the cuevas (the place that does the exchange) were extremely picky as to which $100 bills they would take.
"generally not a great idea economically" is true, but this specific case is one of the few where it could be a fantastic idea.
Control over one's currency > pegging to or using USD >>>> historic Argentinian monetary policy. If (1) is impossible, then (2) would represent monumental improvement over the status quo.
How is it under America's control?
Acknowledge the contact political printing and chaos, poverty and institutional collapse that being able to control the currency has, ans you'll come out with the conclusion that USD as the currency, which what has been used de facto and aggressively attempted to stop by the gov, would be the ideal solution if achievable.
If you don't mention peronism in your analysis or inflation or debt or the transition to democracy it's very hard to see how you're qualified to speak and be at the top of HN about this.
But I guess I have to thank that it's the typical "he's a crazy organ salesman!1!1!1"
This is false: we will abolish legal tender.
Currencies will compete. Many people will choose the dollar.
This is the fulfillment of Hayek dream of stripping control of the currency from the state.
So I would question the consistency of his freedom ideology. If you use the state to enfore strict law on abortion, meaning deciding over other peoples bodies, how will you do so without a state? Or why do so, when you do not want a state at all?
Good luck, Argentines.
(According to argentinians I know)
Oh yeah, and Cristina and all her shenanigans.
Oh, you mean in addition to being an ancap?
Anarcho-capitalism is a nonsense label to allow libertarians to cosplay as anarchists without having to give up on their positions of power. It seemingly only exists so rich people can be against paying taxes or having to follow laws and regulations while getting to pretend they're revolutionaries "fighting the system".
That’s an incredibly bold claim. When did he say that and what was the context?
> If you use the state to enfore strict law on abortion, meaning deciding over other peoples bodies, how will you do so without a state? Or why do so, when you do not want a state at all?
If you consider the top job of government is to protect life, it flows pretty naturally. Just because you personally don’t agree with it does not mean it’s irrational.
See Wikipedia:
"In a June 2022 interview, when asked about his stance on the sale of children, Milei initially said that "it depends"
But being a populist, apparently he took that back after some public outcry.
And when you want to abolish the whole state, then it is really not rational to use the state to enforce some radical ideology with the help of the state in my opinion. But I won't discuss forcing a 10 year old rape victim to carry a baby in the name of life here any further.
I have no idea what milei said, I’m just stating how bad I find Wikipedia sometimes on political topics
https://www.minutoar.com.ar/actualidad/2022/6/29/javier-mile...
This might as well be a sourced from the Wikipedia admin's blog.
edit: Lol, in the last hour, the awful source was removed and the ridiculous quote removed. The wiki now reads:
"When questioned on the topic of selling children, Milei initially responded ambiguously [womp womp] but later clarified his opposition, stating, "Obviously, I do not agree with the sale of children.""
The next level of such nonsense would be framing it like, “Do you think both parents should have a say in the sale of children?” or “Would your universal flat tax on the sale of livestock apply to the sale of children?”.
Did you bother reading the part of "do not want a state at all"... this includes "no government" at all.
The irrational part is that enforcing something using government is impossible without government.
Right there, when I made one?
But no, what you're claiming doesn't align with other proponents of the ideology I've seen. They are only opposed to state coercion, but market pressures can certainly be coercive and they don't resist that.
And by what mechanism would anarcho-capitalists prevent the selling of children or child labor? They don't hold that the state has such a power. Children also don't consent to be even their parents' wards, so the consent of children is not a sufficient framework to construct a basis of opposition.
Markets don't have the will to decline child exploitation and anarcho-capitalism doesn't invest an entity with the power to prevent it. Individuals may honestly say they don't want it but the system offers nothing to oppose the incentives that will cause it.
Market pressures aren't coercion, they're called incentives.
> And by what mechanism would anarcho-capitalists prevent the selling of children or child labor? They don't hold that the state has such a power.
Anarcho-capitalism has never been put into practice, so the specifics are speculative. Just as the specifics of a functioning democratic republic were speculative until the theory was put into practice.
Right now, the government has a monopoly on "justice". If you have a criminal or civil case before the courts, your case is judged according to the "common law", by a state-selected "common judge". In anarcho-capitalism, both the law and the judge would be optional. You choose your law and your judge, I choose mine, and they get together and figure out the case. "Judicial services" organizations interact and cut deals with each other all the time--the only difference is that, right now, they're all run by governments.
This begs the question of good faith (I could just say "my judge is me, and my law is that I do whatever the fuck that I want", but the incentives of such a choice don't make sense. If I murder you, who would provide justice? Thus everyone is incentivized to pay for, one way or another "judicial services", such that if you need them, they are able to come to your aid. This sounds ridiculous on its face, but if you actually think about it, it makes plenty of sense. We pay ~30% of our incomes in taxes in the US, and only a vanishingly small proportion goes to pay for government-monopolized "judicial services". It would likely be pretty cheap--just do the math on how much of your taxes go to paying for the judicial system.
But wait! All that would need to happen to enable child slavery would be for someone to form a legal-services corporation which would not view this as a crime! Sure, but for such a corporation to actually function, they would have to be viewed as legitimate by other legal-services corporations. Can you imagine GEIKO judicial services doing business with an organization that's on the record enabling child slavery? Neither can I.
Thus, if you sold a child into slavery, that child would naturally have a case against you, as you sold something that didn't belong to you and did them tremendous damage.
It's worth remembering that, while such a system might be imperfect, the current system is far from perfect. As with everything else, the state is pretty shit at preventing children from being bought and sold.
> The Children also don't consent to be even their parents' wards, so the consent of children is not a sufficient framework to construct a basis of opposition.
Children don't pick their parents, ergo consent isn't a thing? I don't buy it, and by golly, my legal-services corp won't stand for it!
> Markets don't have the will to decline child exploitation.
Markets have the will to fire people for racist tweets, but not to fight child exploitation?
> and anarcho-capitalism doesn't invest an entity with the power to prevent it.
Yes it does, as mentioned above.
> Can you imagine GEIKO judicial services doing business with an organization that's on the record enabling child slavery?
I absolutely can! Nestle is known to have practiced child slavery and people did and do business with them. Cobalt mines in Congo, south african countries during apartheid, etc. I have known all kinds of horrors in service of the capitalism we have now and nothing you're saying is persuasive to me about why they would stop under this other, more extreme capitalism.
No, they're not. (you're right we should probably skip that!)
> Nestle is known to have practiced child slavery and people did and do business with them.
You're referring to activities in other countries, all outside of the jurisdiction of any "judicial service", be it the US government or otherwise. Why would "judicial services corporations" in an anarcho-capitalist society be expected to address and/or stop evils outside of their jurisdiction, which states are not expected to stop?
> Cobalt mines in Congo, South African countries during apartheid, etc. I have known all kinds of horrors in service of the capitalism we have now and nothing you're saying is persuasive to me about why they would stop under this other, more extreme capitalism.
Mining isn't unique to capitalism. At least in capitalism, you have the option to not patronize unpalatable organizations, which is not the case in any alternative system. And, as you well know, Apartheid, much like Slavery and later Jim Crow in the American South, was imposed via the state's police power. Such systems would be impossible in an anarcho-capitalist society.
> I have known all kinds of horrors in service of the capitalism
This is a joke, right? Capitalism has lifted a billion people out of absolute poverty in the last 30 years, and would have done so 50 years earlier (as evidenced in the natural experiments in Taiwan/China, South/North Korea, and West/East Germany) if it weren't for big-hearted, empty-headed dolts and their irrational, uninformed hatred for capitalism. Leftists killed 100,000,000 million people to prolong their anti-capitalist experiments, with nothing to show for it. More heavy-handed state intervention isn't going to out-do capitalism. The only way to improve capitalism is to free it from the yoke of the state, free it from politicians and grifting bureaucrats, and to let the people run their own lives.
I can tell you have strong opinions about how society should function. Have you considered the possibility that you would be more empowered to improve people's lives in the absence of government? You, and everyone who thinks like you, would have 30% of your income back to plug into whatever social causes you'd want to support. The best part, of course, would be that you wouldn't have to win an election to see your preferred changes come into being--you'd just have to organize and implement your programs without coercion. And don't forget the best part--there's no coercion, ever, by those people who scare the shit out of you! There's no state schools indoctrinating your kids! No monopolies being bought by mega-corp lobbyists! No religious dogma enshrined in law!
I'm also convinced that a lot of the problems people fear ("there will be people starving in the streets!") will not only be easily solved, but we will be better for having the opportunity to solve them. How many old folks are sitting around in their homes feeling useless, who could be running the voluntary welfare societies that used to be so prevalent in the United States? How many families have been spread to the four winds because the nanny state has replaced family support networks? How many men and women are desperate for meaningful work, which has been forcibly relegated to a calcified network of ineffectual bureaucrats who couldn't care less? As Scalia said, the welfare state has given us "donors without love and recipients without gratitude". By removing the state as a faceless intermediary, the urgent need for charity would not be deniable by those who hate paying taxes, and the tremendous blessing that is charity will replace the rampant sense of entitlement to other people's money. Without politicians who are incentivized to drive us apart, social cohesion would greatly improve. We would better understand that we're not opponents in some contrived power for control, we're neighbors who have a very personal duty to help each other get by.
This is why it drives me nuts to hear folks dismiss libertarianism or anarcho-capitalism with assumptions of bad-faith, or accusations of "just being rich people who want to keep their money". It is a recipe for human flourishing. It is imperfect, of course, but better to have an imperfect system based on the ideal of maximum human freedom for all rather than one based on the principle of the minority being forced into the service of the majority.
Say, taking over a factory requires real power, no? How to deal with people who object (like the current owners)? Using force is power by my definition. And if it all is spontaneus with nor formal powet structure, then it still comes close or equals rule of the strong by my experience. And I think I read and debated all or most of the theories of anarchism with various people, but this contradiction, I could not get satisfactory answers for to solve it.
Can you explain how this is different than a government?
To me, it seems like a repeat of history, we had an anarcho-capitalist society already, but people started to self-organize into larger groups with rules, tradition, processes ⇾ states.
A small feudal lord has fewer subjects, but also fewer (no) limits. Nothing preventing him from killing you without repercussions on a whim.
You can not enforce property claims without violence. "Anarchocapitalists" either handwave this with private armies (which is just feudalism with extra steps) or insist on everyone following the Non-Aggression Principle, which is nonsense without a system of enforcement. The more honest types usually fall back to minarchy, i.e. having a small state that basically only consists of a legal system and police force to enforce property claims and resolve disputes.
Heck, the person who came up with the name opposed not only taxes but also the civil rights movement and universal suffrage. The only coherent ideological thread in his life was not wanting to pay taxes, not wanting to have to follow regulations and being convinced he was very smart.
Also, is Murray Rothbard like Voldemort to you? You seem to refuse to even say his name.
In all cases it's explicitly community driven, because no claim on on property can withstand disagreement with the local community.
Take land ownership - it's de facto not enforceable without either government or communal support.
Anarchism is by definition "left-wing". If flat earthers redefined "globe" to mean a saucer shaped object and the media started to run with that because flat earthers made for "good content", opposing that usage wouldn't be dismissed as "arguing semantics" either. Sometimes it's important that words mean things. Heck, the entire political right in the US has spent the past years making the changing meanings of words their main issue. Clearly "arguing semantics" matters sometimes.
Calling yourself "anarcho-capitalist" is like calling yourself "punk" because you're knee-deep in Sex Pistols merch. It's using a label as a fashion accessory, not a political statement. Clearly you think political labels have some use or else you wouldn't refer to "left-wing" anarchists.
There's no historical basis for the label "anarcho-capitalism". Ancaps claim they're building on individualist anarchism if asked to justify their label but even Stirner was to the left of them. "Anarcho-capitalism" isn't promoting individualist anarchism, it's promoting autocracy. Anarchism is the absence of oppression and power hierarchies, "anarcho-capitalism" is the absence of regulations and limitations on individual power, relying on The Market instead of Divine Right as a justifying cause.
"Anarcho-capitalism" is not only not "real anarchism", it's not any anarchism, just like throwing bricks at Starbucks windows is neither necessary nor sufficient (i.e. almost entirely orthogonal) for being an anarchist.
Libertarians, like Marxists, are terribly naive about the prevalence and maliciousness of psychopaths and hustlers. The global economy is a dark forest.
I wish him good luck, sincerely, but if it looks like it works a lot of other countries will start going to great lengths to mess it up.
Oh word? Where has this worked in the past?
The Case of Ecuador https://bfi.uchicago.edu/wp-content/uploads/The-Case-of-Ecua...
From my experience it’s worse than that. Some are idealists as you mention, but a lot of them plan or hope that they will be doing the hustling.
Too late. That already happened a long time ago.
I remember an Argentinian friend telling me of a time when she and her coworkers would get paid and they'd all immediately leave work to spend their money before the prices went up. Waiting until the end of the day meant taking a significant haircut.
What do you mean by this?
So in practice it is very inconvenient not to have one and to be able to refuse anything you want or to have to accept anything. The workaround is to have a contractual clause that specifies exactly how a debt may be discharged.
In the case you mention this is called "defence of tender before claim". It means the person offered to the money but that was refused, so they go and pay it into court to protect themselves. In effect it means that if someone offers to settle in legal tender and is refused, then follow that legal procedure, then the creditor cannot do anything anymore expect recovering the money from the court.
Is that still the case?
Very German thing to do, yet in the UK I have not had a need to pay in cash, just use your card (or phone/watch if you are into that). Dunno if it was the money type, or just not want to be dealing with cash per se.
Good luck.
I don't buy into the attendant far right libertarian whackjobbery, so not sure the new president is the answer to anything, but clearly if things have been so bad for so long, especially with the same hard left ideas one that have historically shown to end in the same place over and over again, radical change in the opposite direction looks very attractive.
And it might off in spades, if not pursued in the same stupid ideological manner as the socialists, but it's high risk. I hope it pays off for them bigtime. I'm not wedded to any ideology, unlike some.
This will simply regress Argentina to the mean of the poor, deinstruialized, primary resource exporting countries of the rest of Latam.
I wish you could do even a hint of research to spew this pathetic apologia.
Now the middle class in this country will get to see to what extend their sustenance was being managed through wealth transfers.
140% inflation, currency controls, 16 years of K government destroying institutions and you want to come at me with the "lots of English speakers", now things are gonna be worse.
Mate, people emigrate from Argentina to the rest of LATAM, not viceversa (unless you earn in USD).
The fact that you're pretending people live better here and you're just trying to make it about class shows how little perspective you have. Speaking for "the People" right?
If you really think there is no middle class in Argentina, seriously, you need to travel around more, what can I say.
Do you know any argentines who wouldn't choose the dollar as the currency of choice?
Choosing the dollar isn't "stripping control" from the state, it's giving it to a sovereign state that doesn't have your interests in mind. Given the current situation it may be better, but lets stay in reality here.
Until now, the government of Argentina has abused its currency monopoly by printing money, with devastating consequences. Inflation is approaching 150% per year. By "We'll abolish legal tender, stripping control from the state", GP means "We'll abolish legal tender, eliminating the government's currency monopoly and allowing the people to choose a sound currency." This is, by definition, "stripping control from the state", where "the state" obviously refers to the Argentine government.
> it's giving it to a sovereign state that doesn't have your interests in mind.
This would be true if the Argentine government was imposing the dollar as legal tender, but they're not. They're allowing the people their choice of currency. For now, that may well be the dollar. But if the US government begins to abuse the dollar (via inflationary policies, for example), dollars will lose favor and a more sound currency will take its place.
This also prevents the Argentine government from steering their economy with monetary policy, but Libertarians view this as a feature rather than a bug.
With devastating consequences for the middle class.
It's printing money to keep entitlements for the poor and to keep the rich from paying for those entitlements (more than they already are).
Does Argentina even have a middle class anymore?
I was looking at wealth inequality - and to be in the top 10% in Argentina - you need barely more than $100k.
It seems like, historically, a decent chunk of the top 10% wouldn't even count as middle class in Argentina right now.
A few years ago, I managed a team of developers and analysts. They were all paid in USD through a shell company, if you will. Everyone expected this. The first question new recruiting firms asked us was, “You will be paying in USD, correct?”
We had one guy who had to be paid 50% in ARS because he had child support obligations, and it was a headache. Not because of the split on our side, but for the shell company. He was actually the lone ARS exception employee to be paid in ARS
https://devonzuegel.com/post/inside-argentina-s-currency-exc...
In cybersec, the Argentinian scene is also one of the hottest producers of zero-day vulnerabilities. Those get paid in crypto, which is then washed to USD/EUR locally.
However, remember that the vast majority of Argentines are paid in pesos. Even with salary adjustments, the vast majority of Argentine salaries cannot keep up with triple digit inflation. Bank accounts have a minimum of double digit interest rates and your money still loses value in relation to inflation. This is a large part of why the poverty rate has increased from a little under a third of the country to over 40% of the country.
[1] https://www.ft.com/content/ef21f45a-4eea-4eb6-9257-956f5b0d9...
You also can't love your country if you sell your 'gold' (rare earth minerals) mines to foreign entities
It'll become the Congo of South America, what a shame this election was
Relevant piece of information: https://www.csis.org/analysis/south-americas-lithium-triangl...
Seems to correlate with the collapse of lithium and EVs becoming cheaper, the common denominator is pretty obvious at this point
Milei wants to submit to their bully and give away their national resources, and it's not just about Lithium: https://cancilleria.gob.ar/en/process-sanctions-against-oil-...
We shall see. Your link is about arguing about oil near the Malvinas / Falklands which is kind of a different issue.
What you're saying is factually true but overlooks what happened with Greece, Spain, and others during the 2010s.
What is this weak appeal to false nationalism argument?
At the beginning of next year you will be able to exchange every peso in existence for about 40 billion USD or so, a lot a money, but not really...
In theory, panics "should not happen" if banks are properly run. In reality, people can and will panic from time to time, because the rational response to concerns that banks may fail is to withdraw everything from them.
If Milei is successful in getting Argentina to adopt the US Dollar as the national currency, I can confidently predict a future wave of bank runs: A majority of depositors will show up asking to get their dollars out of their banks, which will of course call the Argentine Central Bank to try and borrow dollars... but the Argentine Central Bank itself can run out of them.
An economist would correct you that the rational response to concerns that banks may fail is to withdraw everything from them while lying about it and telling everyone else not to do it.
Argentina did this before, in the 90's with disastrous consequences. Just google for Domingo Cavallo and Carlos Menem.
Milei wants to do what was done before and get different results.
The only way you can say this is if you weren't alive to see it.
I'm from Hong Kong and HKD is only worth anything because we are pegged to the dollar.
One of Javier's main goals is to remove to the Argentine politician the capacity to emit more useless currency. I don't know if he's going to go ahead with that proposal or if it's going to sleep forever "soon to come", but we are just tired of our politicians, at the point that we prefer to depend on politicians of another country to dictate our monetary policy...
Noy many things more stupid than subsidying somebody else's private for-profit business costs.
The state will stop bleeding so much cash.
That's when you have government give exclusive power to use resources to individuals and provide firepower to them. Remove all limitations of contractual terms and all labor protections.
Of course they are betting the us dollar remains stable. Nobody can know this for sure, but history says it is a better bet than the status quo.
2) Being stuck with what the Fed does isn't ideal, but VASTLY better than 130% inflation.
There are a number of countries who use a currency over which they have not control, be it the US Dollar or the Euro. I suppose the trade off is that you get a stable currency and it makes trade easier.
Then you’d avoid all the nationalistic backlash, economic illiteracy, and sidestep (some) of the “dollar milkshake”.
The ratio doesn't live in vaccuum. Setting the ratio means nothing if nobody is willing to step up and sell dollars at that price. And for that they need dollars to sell. The ratio is not some random number picked out of a hat.
Having problems with debt? Loan a LatAm country $100B to fuel their economy. Does wonders to balance sheets.
https://www.ft.com/content/b2ce1c18-1786-40eb-b741-a173756f2...
Then it would leave to commercial banks the task to procure themselves enough dollars
With the runaway inflation there, I get why the idea seems like a good one, especially at first glance. I know the realities of such a change are pretty complex and nuanced and that doesn't seem like this new president's strong-suit.
The recent John Oliver coverage of Milei has me far more concerned about the social and environmental destruction and instability his leadership is likely to cause.
I sincerely hope he governs far better than I think anyone has a right to expect, given how he campaigned.
However, this isn’t without precedent. Ecuador currently uses the US Dollar as its official currency.
If people are already transacting in USD, and prices are set in USD, and the peso is just a proxy for that in many transactions, I can understand the desire to cut out the middle man.
Econtalk: Devon Zuegel on Inflation, Argentina, and Crypto
When inflation is often high and unpredictable, people look for unusual ways to hold their savings. And when banks are unreliable because of public policy, people look for unusual ways to keep their savings safe and to make financial transactions. Welcome to Argentina, where Zuegel finds surprising applications of cryptocurrency for solving problems.
https://www.econtalk.org/devon-zuegel-on-inflation-argentina...
Interview is based on Zuegel's article: "Inside the crypto black markets of Argentina"
https://www.freethink.com/hard-tech/crypto-argentina-black-m...
This is the tricky part of this by the way. For a sovereign state any preventative action is always the equivalent of me hiding the keys to the liquor cabinet from myself so I can quit drinking.
In countries that make it work it's a tricky balance of political incentives and traditions but even there when the temptations are great - see the U.S. where any politcal imperative or norms for a sensible budget are outweighed by the temptations that seigniorage brings with it.
How might this effect BRICS? Interesting that Argentina will align with the USD.
Doesn't matter, as many, many people have noted BRICS doesn't exist, and to the extent that it does it's a joke. Two of the countries are actively at war with each other, 2 are falling apart, and the last one is slowly losing a brutal land war.
Better question is how this effects LatAm politics, and that's more interesting. Certainly there's been a drift to the left there, but wild swings in policy are an Argentine hallmark.
Better question is how this effects LatAm politics, and that's more interesting.
How will it? The first that comes to mind is Brazil and trade between the two. Brazil has been moving away from America, as Argentina moves closer.
Bloomberg article covering Argentina's dollarization when it was first proposed by Milei which has some better info on what that means for Argentina https://archive.is/tef4H IMF paper linked at the bottom of that article is a good read on what dollarization actually means for an economy outside of a political agenda.
The tricky bit is making sure the resulting US occupation becomes long lasting, I think you would have to store away substantial amounts of money to bribe a gaggle of senators for a few decades to make incorporation possible.