Economic system requires innovative transformations

Argentina, long plagued by economic instability, is experiencing a significant turnaround under the leadership of President Javier Milei. The country's economy has grown by over 5% this year, and inflation is declining, a stark contrast to the 25% monthly inflation rates (annualized rate of 300%) that affected about 60 percent of its population just 18 months ago.

The success of Milei's administration can be attributed to its focus on economic liberalism. The public sector has been streamlined, reducing bureaucratic red tape that previously hindered businesses and drained the economy of essential labor and talent. As a result, the poverty rate in Argentina is projected to decrease further, with the rate currently standing at 30%.

The Milei administration's economic policies have been marked by a shift away from subsidies and towards tax cuts. This approach, based on the premise that tax cuts can promote investments driven by market forces, while subsidies often benefit rent seekers rather than delivering sustainable economic results, seems to be paying off.

Meanwhile, across the Atlantic, the United States President Donald Trump's administration recently passed the "One Big, Beautiful Bill." This bill aimed to address government spending and taxes, but was met with criticism. However, it is important to give the bill a fair chance and observe its effects.

The global economic landscape is marked by high public debt levels, with many economies in a state of malaise. Some policymakers disguise excessive debt under labels like Germany's "Sondervermogen" or common European debt. A theory called Modern Monetary Theory even claims governments can incur unlimited debt, a highly questionable idea.

In contrast, President Trump has focused on reducing taxes, rather than accumulating debt through subsidies. This approach, similar to that of President Milei, could potentially stimulate economic growth and reduce debt levels.

Europe, in particular, could benefit from a leader like President Milei, who has implemented successful market-oriented reforms. The empirical evidence suggests that planned economies tend to misallocate resources more frequently than market-driven ones.

Argentina, once a symbol of economic crisis, is now a beacon of hope. The country, fundamentally a wealthy one, is turning around after decades of socialist policies that led to widespread insolvency and high inflation rates. The success of President Milei's administration serves as a reminder that sound economic policies, grounded in market principles, can lead to significant economic improvements.