Argentina was once one of the richest nations on earth, richer than Canada, Australia, and all but a handful of countries. Now, it is behind around 70 countries, far behind countries that were once much poorer than it, like Turkey, South Korea, and Panama. Arbitrary regulations and red tape did much to cause its economic decline.
Now, Argentina’s newly-elected President is repealing many of his country’s regulations. Argentina has one of the biggest red-tape burdens on earth, although Brazil has a more complicated tax code, and France has a higher tax burden. Argentina ranks 23rd worst out of 165 countries in terms of its regulatory burden, imposing more red tape than many European countries with much better health, safety, and labor conditions.
Last week, Argentine President Javier Milei issued a decree that repeals or reforms 300 laws to begin reversing “decades of failure, impoverishment, decadence, and anomie.” Argentina ranks very low in economic freedom — 158th out of 165 countries ranked — and ranks a pitiful 163rd in trade freedom. It has one of the world’s highest inflation rates — Argentina ranks 161st out of 165 nations in monetary policy.
But many other laws that inflict burdensome red tape cannot be repealed by the President, because they were passed by the country’s Peronist (leftist) legislature, and don’t contain provisions allowing the President to waive or suspend them. Unfortunately, the leftist Peronist movement remains in control of Argentina’s legislature. The Peronists have dominated Argentina for decades. Milei, who favors free markets, hates Peronism.
President Milei cited Argentina’s economic crisis to justify repealing the regulations. As the Center for Global Liberty and Prosperity points out, Milei noted that
Argentina put collectivist thought—whether leftist, fascist, or otherwise—in practice in the past 100 years and…lost its freedom as a result….The unwillingness of politicians to deal with the underlying causes of Argentina’s recurrent crises has led them to implement an unending series of regulations that try to address the consequences.
Thus, Milei explained: “The state as a whole has become a mechanism to impede trade, work, production, savings, investment, the generation of wealth, economic growth, and, fundamentally, freedom.”… Milei’s sweeping deregulation decree makes sense. It aims to reduce state favoritism and to improve growth and opportunity, especially for the least well‐off…
Milei’s decree covers a wide range of laws. Some of the deregulations include:
• Repeal of the law regulating the rental of real estate. The restrictions on length of the rents, conditions for enforcement, method of payment, were so rigid and unreasonable that the result has been a nationwide housing scarcity, high prices, and the growth of an informal rental market.
• Repeal of the supply law and the shelves law that required stores to stock their shelves according to rules governing which products (by company and by national origin) could be displayed and in which proportions.
• Repeal of the “Buy Argentina” law, equivalent to “Buy America” laws.
• End to price controls, which predictably generated scarcity.
• Repeal of Industrial Policy.
• Repeal of the law that prohibits the privatization of state‐owned enterprises.
• Liberalization of the labor law.
• An end to the prohibition of exports.
• Authorization to transfer the shares of the national airline Aerolineas Argentinas. Milei plans to privatize the airline, which has lost billions of dollars over the years, by transferring ownership to its workers. When Milei earlier proposed this idea, the head of the pilot’s union objected by declaring “they’re going to have to kill us” if they try.
• Implementation of open skies policy.
• Strengthening of contract law to secure the freedom of contract.
• Law reform to allow for contracts made in foreign currencies to be upheld. In practice, this legalizes transactions in dollars and other currencies, including exchanging pesos for dollars and including the use of bitcoin and other cryptocurrencies.
