Can an ‘Anarcho-Capitalist’ President Save Argentina’s Economy?

from The New York Times I'm Sabrina. Tavern and this is the. [Music]. daily Argentina a poster child for. economic dysfunction is again in the. midst of an acute. crisis last month fed up with liberal. fixes argentines voted for the candidate. promising to blow it all. up today my colleague Jack Nikas on.

Javier mle the right-wing populist now. taking office in Argentina and his. radical plan to remake the country's. [Music]. economy it's Monday December. [Music]. 11th Jack it's nice to see you again. thanks for having me so we are talking. today about Argentina and its new.

president Javier Malle he was. inaugurated yesterday and he's a pretty. flamboyant and colorful populist kind of. styled in the vein of of Donald Trump so. tell me about this new president well. this was really one of the most. surprising elections in Argentina's. history and from the start the national. conversation was dominated by Javier. mavier liio he spent years working as an.

economist and teaching economics then. was elected as a freshman congressman. who really didn't show up to Congress. much but really became known to. argentine's for many years of TV. Pantry he used to be brought onto these. cable news talk shows to be the token. conservative voice in a country that has. in recent years been pretty left-leaning. and he really stood out for a combative.

style and opinions that are really. outside of the. mainstream so for example he called the. pope a communist and the embodiment of. evil and bear in mind the pope is. Argentine and a huge figure in the. country so this was really. controversial and he's also suggested. that the left has greatly exaggerated.

the number of disappearances or murders. that occurred during the bloody military. dictatorship in the 1970s and 1980s and. that struck a lot of people as a. troubling Sympathy for the country's. authoritarian. past he's argued that the right is. aesthetically and intellectually. Superior than the left he has said. climate change is a socialist plot and. in the leadup to his elections he was. pedaling baseless claims of voter.

fraud but despite these unusual and to. many worrisome Politics the thing that. you need to understand about Argentina. is that politics is really about. economics and melay is the candidate. promising a sharp break. economically specifically he's pitching. voters on a Libertarian overhaul of.

government and libertarian meaning. meaning that he wants to essentially. kind of get the state to get out of the. [Music]. [Applause]. way he's trying to argue that the state. is predatory against the average citizen. in in its policies and taxes Etc and. these libertarian views would really be. a radical departure from what the. government and what our Argentina has.

had for decades. [Music]. essentially and so mala's election. Victory showed how desperate voters are. for. [Music]. [Applause]. [Music]. change so tell me about that desperation. like what was it that caused argentines. to elect this political newcomer with.

these extreme views well I think anyone. who has been vaguely paying attention to. Argentina over the past several decades. knows that they've been dealing with an. economic crisis after economic crisis. for a long time and and they are. currently in one of their worst and. that's saying something for Argentina. right now annual inflation stands at. above 140% wow the Argentine peso has. completely disintegrated in value and. just more and more argentines are. falling into poverty so what does 140%.

inflation look like give us a sense of. that well it's a situation where the. value of the Argentine currency is. constantly falling and prices are. constantly going up so it's a bit. confusing to live in Argentina sometimes. I I'll give you one. example when I was in Buenos Aris. recently I met this owner of a hardware. store called Oscar benites his door is. this really lovely little kind of almost.

tiny walk-in closet in the way but. covered in products screws and hinges. and locks but he doesn't know the price. really of any of. them because of the fact that the pesos. value is falling so quickly and prices. are rising so quickly and when someone. wants to buy something he has to go to. his computer to look at a list that the. supplier provides.

which is constantly updating with new. prices so how often does he have to do. this how often do you have. to because even in the past two. weeks he said that those prices were. changing it sometimes several times a. week wow and and how is he doing. personally his. financial he was depressed and you know. kind of had a lot of GS humor about the. situation.

I mean he at one point called the. Argentine peso use toilet. paper and as a result he has tried to. find ways to cope what does he do when. he gets. money he buys for doesn't want to hold. on to. it not because the. p you know when he gets pesos he tries. to get rid of them as quickly as. possible so they don't lose any more. value value so he either goes and buys.

more products and supplies he has way. more than he really needs but he feels. they hold value better than the peso or. he buys US dollars so he's basically. trying to preserve the value of the. money that he has by going out and. buying dollars exactly and argentines. for many years now have flocked to. dollar bills to hold their value to save. their money as a result more than $200.

billion in hard US currency is now in. Argentina and that means that on a per. capita basis argentines hold more Bank. notes US Bank notes than Americans and. in fact anybody who has bought a house. in Argentina will tell you that they. almost certainly bought it in $100 bills. okay so argentines have a lot of. American dollars which is of course a. bad sign for their economy reminds me a. lot of Russia in the 1990s when also the. ruble was just going wild and losing.

value people used dollars to buy big. important things at that time it was a. Communist economy going into the global. one what is it here what caused this in. Argentina well it's a long story but the. short story is that it's really just. Decades of deep economic mismanagement a. series of left-leaning governments has. expanded the social safety net with. things like free healthare free. universities dramatic expansion of.

social programs deep subsidies for. energy and public transportation big. pensions and all of that without much. economic Revenue to pay for it but to. make up for that shortfall they have. drained economic reserves they have. taken out massive International debt and. also just printed more money and that. has left the peso much less valuable and. pric is skyrocketing which brings us to. Mr Malay so what are the specifics of.

what he's proposing Jack I mean what's. his economic plan exactly well he wants. to take Argentina in a completely. different. direction so specifically he wants to. drastically shrink the size of. government he wants to eliminate 10 of. the government's 18 Ministries he has. proposed privatizing the State airline. the railroad company the state oil. company and really trying to remake the. Argentine government and Argentina. itself in his libertarian view of the.

world and that also means some much more. radical. [Music]. ideas. we'll be right.

[Music]. back okay so Malay is elected he has. this kind of Hail Mary plan to rescue. the country's economy including slashing. all these government Ministries and. really taking a chainsaw as he has on. spending but there's something you said. that's even more radical at the heart of. his plan plan what is it so actually the.

central part of his campaign pitch has. been what we would call dollarization he. essentially wants to use the US dollar. as Argentina's National currency use the. US dollar as Argentina's National. currency how would that work so. basically his argument is that the. Argentine government has shown to be so. irresponsible in its management of the. currency and the Argentine peso has. become so worthless you might as well. just kill it and use a more stable. currency you know specifically like the.

dollar and he chose the dollar because. Argentina is already kind of dollarized. I mean we spoke about how people buy. houses with US dollars they stash US. dollars under their floorboards and. their mattresses so this is a country. that is already deeply comfortable with. the US dollar and is already using a lot. of US Dollars and so he basically wants. to formalize that and is this a thing I. mean have countries done this before it. is there are more than 30 countries that. have actually adopted another nation's.

currency as their own legal tender and. in Latin America specifically there have. been a few cases of dollarization. Panama's dollarized Ecuador and so this. is not a completely novel idea but. Argentina is a larger and more. sophisticated economy than those other. nations okay so dollarization has been. done though in smaller Latin American. countries but what are the mechanics of. it how does it work so how to do it is. relatively simple in.

theory first the Country Must agree upon. an exchange rate for its currency to the. dollar and then the country on a. specified date essentially flips the. switch and all of its obligations things. like contracts and deposits and loans. and wages are all converted to dollars. on paper at that agreed upon rate and. then there is another part which is. potentially more tricky particularly for. Argentina and that is converting all of. argentine's pesos the physical banknotes.

to physical US Dollars and for that you. need dollars so mainstream economists. believe that the government may need up. to 30 to 40 billions to dollarize and. that could be a big problem for Mele and. his plans if you consider their debts. they basically have. zero so argentines like Oscar the. hardware store owner they might have a. lot of dollars but what you're saying is. that the government itself does not. exactly and one risk is that if the.

government doesn't have enough dollars. it may not give Argentine much. confidence in a dollarization scheme so. for instance if you're an Argentine and. you see in your bank account that the. government has now suddenly converted. your Paces to dollars but you're. skeptical that the government actually. has enough dollars for everyone maybe. you're going to go to the bank and take. that money out before your neighbor does. and if the next person does that and. then the next person does that now we. have a run on the bank. wow so a lot of hurdles here I mean they.

need dollars to dollarize they don't. have them and then there's a chance that. when people see what's happening they. Panic they raise to the banks and they. take their money out causing a real. crisis in the financial system exactly. so there are some real hurdles and some. real risks but there is also a competing. view that there could be real benefits. uh we have seen dollarization really. almost eliminate inflation in the past. and on top of that in a place like. Argentina where there is $200 billion in.

US currencies stuffed under mattresses. and in safe deposit boxes dollarization. could bring those dollars from under. mattresses and into Banks officially and. that could be a real benefit for the. economy so there's a real question about. whether his signature policy you know. this. dollarization would actually work even. if he could pull it off but I guess the. question in my mind you know since he's. now of course in office as of today is. can he pull it off like you know he has.

these ideas that were electric for. people in Argentina for voters but can. he Implement them well I think that's. another major hurdle to his plan for. dollarization because remember melay is. a total political Outsider he's coming. in with no governing experience and his. nent political party just two years old. has just 15% of the seats in the House. and something like dollarization would. need Congressional approval so what. we've seen since the election is.

actually a bit of dealmaking he has. actually started to make deals with a. center right Coalition which would give. him potential control of Congress but as. a result he has uh brought in more. moderate members into his cabinet and. his focus in recent weeks has really. shifted from things like dollarization. to more about his plans to shrink the. size of government and budget cuts and I. think what we're seeing is mle is. confronting the political economic. reality as president of Argentina and.

dollarization may be something he does. down the road so this is a case where. Malay campaigns as an outsider with. these radical plans but the political. realities force him to moderate those. plans once he's in. office well I think we should remember. that what melay is proposing for right. now for Argentina is actually rather. radical particularly when considering. Argentina's history these would be very. very deep government budget cuts and.

this is a country where many people have. come to rely upon government services. and subsidies and so these policies. could be really difficult and remember. this is a country that is already. struggling with a deep economic crisis. so poverty is already up Hunger is. already up and that could get worse and. mle has actually warned the next year is. going to be very tough but on the other. side this is actually what some. economists think Argentina should have. been doing a long time ago. you know they actually need some of this.

hard medicine but we don't know how it's. going to play out in reality so in other. words the Hail Mary that Argentine went. for in this election it may in fact be. the medicine that the ailing economy. needs but the application of that. medicine it's going to be very difficult. to swallow have argentine's considered. that The Cure could feel as bad as a. disease I think that's a major risk. mle is a radically Libertarian president.

who has an avowed hatred for the. government who is now in charge of what. has for many years been a very big. government and he's made clear that. starting this week his plans to shrink. that government will be really painful. for the country and so that means that a. populace that's already suffering so. much economically is now being told that. they're they're going to have to suffer. a lot more before it gets any. better so the question is will. argentine's put up with that and whether.

or not they do may decide after so many. years of struggle whether Argentina can. finally write its. [Music]. course Jack thank you thank. [Music]. you on Sunday after being sworn into. office president mle addressed thousands.

of his supporters in the Argentine. capital of. [Music]. buar in the speech mle laid the. responsibility for the country's. economic problems at the feet of the. outgoing Administration and promised to. take the quote necessary decisions to. solve them.

soon after in his first official decree. the new president cut the number of. government Ministries from 18 to. [Music]. 9 we'll be right. back here's what else to know today over. the weekend prominent Democrats moved to.

denounce anti-Semitism in the wake of a. growing Scandal that saw the president. of the University of Pennsylvania resign. after giving testimony to Congress last. week we shouldn't have to gather on a. rainy day in Pennsylvania to talk about. anti-Semitism but we must appearing at a. synagog in Philadelphia Senator Bob. Casey and Governor Josh Shapiro made the. show of solidarity just one day after.

the resignation of the University. president Elizabeth McGill Mill's. departure followed days of pressure from. donors political leaders and alumni who. had criticized remarks she made to. Congress that appeared to evade the. question of whether students who called. for the genocide of Jews should be. punished the presidents of Harvard and. MIT made similar remarks to Congress. last week and are now also Under. Pressure to.

resign and European Union policy makers. agreed late last week to a sweeping new. law to regulate artificial intelligence. one of the world's first comprehensive. attempts to limit the use of a rapidly. evolving. technology the law called the AI act. sets a benchmark for countries seeking. to harness the potential benefits of the. technology while trying to protect. against the possible risks like. automating jobs spreading misinformation.

online and endangering National. Security today's episode was produced by. Carlos prto Michelle Banja and Stella. tan it was edited by MJ Davis Lynn and. Mark George fact checked by Susan Lee. contains original music by Marian Lozano. and Dan Pow and was engineered by Chris. Wood our theme music is by Jim brunberg. and Ben Lanser of. [Music].

ly that's it for the daily I'm Sabrina. tavernes see you. [Music]. tomorrow.