108 economists can't be wrong - or can they?

I READ a lovely article the other day which I thought I would share. You might know it’s about my favourite politician - President Milei of Argentina.

Before his election, in November 2023, 108 (that’s one hundred and eight) economists penned a diatribe against him and how devastating his espoused policies would be. No less a luminary than Thomas Piketty was amongst them.

And – in a sort of talking-down way – they acknowledged that there was a desire for change in Argentina. How arrogant! Economists always think that getting over 100 to sign something makes it true. There are the famous 364 who said how awful Thatcher’s policies were (and you can argue both sides of that).

Now, of course, economies don’t just change overnight – it takes time – but a year on Milei has done something in Argentina that no one thought possible.

In essence he has done two broad things.

Firstly, stop printing money. Secondly, slash government spending and employment. Yes there’s much more but these two are the linchpins of the revolution. It’s so much easier for a government to print a bit more cash than make a hard or unpopular decision. It’s why I always fall about laughing when politicians say they are making hard decisions.

What I particularly liked about the article by Jon Miltimore in the Daily Economy, was he then went to a few other economists to ask what they thought about the 108 being so absolutely wrong. Needless to say, there was not a lot of feed back (no one likes to be so spectacularly wrong and so visibly) but one brave chap called David Henderson had actually written an article about how wrong those economists views were. His assumption? Those economists “have a lack of understanding of free markets and government intervention”.

Now call me picky, but I would have to say that any economist who didn’t understand free markets and what government intervention can do to screw things up really ought to get another job. That said, of course, there’s loadsamoney to be had in grants or jobs telling governments how to spend money. I’ve never seen any grants anywhere looking for ways to save money (but I stand to be corrected) and right now, in America, we might just be getting the stirrings with Elon Musk and his DOGE. I sincerely hope it becomes a thing.

So let’s just explore that a bit. The 108 were saying keep going down the path you are on and everything will be fine (which it hadn’t been for over 40 years).

Milei was saying we have to try something different – we need to let the markets decide and not interfere with them. And guess what? It worked – at least it’s going in the right direction and yes there are lots of issues still to be addressed but the Argentine economy, let loose, will relatively quickly pick up the slack and make welfare programs affordable again.

And that really is the point. I have long argued that we have crossed the line where we can afford to pay for our bloated and wasteful public sector which sucks up ever more from the productive economy. President Trump has called time on Europe spending billions on welfare and sending the defence security bill to the US.

Never mind it takes 13 years to even think about starting an infrastructure project here in the UK. The Danes planned and are building  their amazing Fehmarn tunnel joining Germany and Denmark in little more than five years.

And yes, I know there was a lot of discussion before the tunnel was agreed. And yes, we’ve had the fine words about our own planning situation, but so far I’ve seen very little to suggest anything is going to change. And I’d be willing to bet if the insanity around netzero and all the rest doesn’t change we will definitely be sitting in the dark in the not too distant future.

Interestingly, the thing that will tip the balance is when people can’t charge their phones. There will be riots in the streets. Oh, and you won’t be able to make a cup of tea because there’s no water. Or electricity for the kettle.

So let’s hear it for Milei and his belief in free markets. Argentina, once the richest country on earth, might get there again.