Assessing Javier Milei, the World’s Best Leader: Part V

Here’s what I’ve written so far as part of my multi-part series on Argentina’s libertarian president.

• In Part 1 of this series, I showed how Javier Milei has done a great job shrinking the burden of government spending.
• In Part II, I investigated how much he might be able to improve Argentina’s ranking in Economic Freedom of the World.
• In Part III, I shared central government spending data to reveal that Milei has been outstanding rather than merely  impressive.
• In Part IV, I reviewed two of the major structural obstacles to Milei’s agenda of economic reform and national revival.

For today’s column, let’s look at what is happening with red tape.

We can start by confirming that excessive regulation is a major problem. According to Economic Freedom of the World, Argentina ranks a lowly #148 out of 162 countries.

This means that investors, entrepreneurs, workers, and consumers have to navigate all sorts of burdensome rules as they engage (or try to engage) in mutually beneficial exchange.

In the past, I’ve referred to red tape as an obstacle course that makes it harder to get from Point A to Point B. And Argentina’s regulatory burden is one of the worst in the world.

Milei’s stated goal is to tear down that obstacle course.

And he certainly has started strong.

Here are some excerpts from a report in the Latin American Post.

President Javier Milei’s team has made significant strides in dismantling the rules that hinder free market competition. These changes are not just policy shifts, but a significant push towards a more capitalist Argentina, reducing government control and fostering economic growth. …Milei’s government eliminated 43 outdated rules that tightly controlled private businesses. These rules included price controls on items like beef and milk and unnecessary tasks for businesses and schools. The government cut old rules that set unfair prices and created extra work. One significant change was ending the import licensing system, which cost $5 million yearly. They also stopped the DJCP program, which requires over a million reports from businesses annually. …Milei’s team is actively promoting the ‘Ley Hojarasca’ (“Leaf Litter Law”), a bold initiative aimed at removing 70 laws that hinder freedom and ownership. This move is expected to significantly enhance the business environment… Milei’s changes considerably lowered bureaucratic barriers, which hurt Argentina’s economy.

In a column for the Financial Times, Walter Molano, the Chief Economist for BCP Securities, is favorably impressed by Milei’s agenda.

Here is some of what he wrote.

…it is micro-level policies…that may finally be changing Argentina’s historically awful economic trajectory. …Milei…has broken the mould of previous stabilisation programmes by focusing on microeconomics and institutional reform. Under the leadership of economist Federico Sturzenegger, the government has begun to dismantle decades-old webs of regulation, intermediaries, middlemen and tariffs that stymied innovation, productivity and competition. As a result, inflationary pressures have ebbed as transaction costs have declined. …This approach, enacted at the micro level rather than the macro, has been replicated throughout the country, eliminating many of the bottlenecks that have made life so difficult and expensive for millions of ordinary Argentines. …real change is occurring at the micro level, allowing the population to break free of the shackles imposed by the political system.

Last but not least, here are some passages from a story in the Economist.

…an extraordinary experiment is under way. Javier Milei has been president of Argentina for a year. He campaigned wielding a chainsaw…his economic programme is serious and one of the most radical doses of free-market medicine since Thatcherism. …Mr Milei believes in free trade and free markets, not protectionism; fiscal discipline, not reckless borrowing; and, instead of spinning popular fantasies, brutal public truth-telling. …Argentina…so far the only country in modern economic history to have tumbled from rich-world status back into the middle-income bracket. Mr Milei was elected with a mandate to reverse this decline. …There has been a bonfire of red tape, liberating markets from housing rentals to airlines. The results are encouraging.

These three articles are very encouraging, though we don’t have any concrete way of measuring the level of progress. A few days, I issued a back-of-the-envelope guess that Milei would improve Argentina’s regulatory score by a full two points, from 4.8 to 6.8.

But I made that prediction without knowing how much he can do unilaterally and how much of his agenda will require legislative approval.

If he has free rein, I have faith that Argentina would improve dramatically and probably surpass the scores of the three least-regulated jurisdictions, which are Hong Kong (8.86), New Zealand (8.78), and Singapore (8.73).