Javier Milei is the recently elected president of Argentina. He is a vocal libertarian and critic of socialism. He gave a speech this week at the World Economic Forum (WEF) in Davos Switzerland where all those with lots of money, or political power, or both, go to mull over global issues.
Here are some reactions on Twitter.
This view of the State vs. the Market seems a little old fashion. Does anyone really believe that one entity, the bureaucracy paid for through taxation, provides all public goods to all citizens? Often the media acknowledges the role of non-profits, like the Red Cross, stepping in with services in countries under siege. The western countries are set apart in their degrees of social democracy, implying that the decision to draw lines between state provision of benefits and the private sector vary depending on the will and the customes of the people. The concept of a dichotomy between two centers of power, the State and Big Business, is so twentieth century.
Here’s an example of two people hearing the same speech and yet not registering the same intake of information. Rodrik says Milei denounces neoclassical economics as another brand of collectivism, empowering the state through the doctrine of market failure.
Here’s the section of Milei’s speech this Havard professor is referring to:
The problem with Neoclassicals is that the model they fell in love with does not map reality, so they put down their mistakes to supposed market failures rather than reviewing the premises of the model.
Under the pretext of a supposed market failure, regulations are introduced. These regulations create distortions in the price system, prevent economic calculus, and therefore also prevent saving, investment and growth.
This problem lies mainly in the fact that not even supposed libertarian economists understand what the market is because if they did understand, it would quickly be seen that it’s impossible for there to be market failures.
President Javier Milei’s WEF speech at Davos 2024
I don’t hear Milei saying neoclassical economics is a brand of collectivism. The neoclassical model, although powerful and useful, does not always represent of the entire economic picture under analysis. Instead of addressing why that could be and re-evaluating the premises of the model, hands have been thrown in the air and the following conclusion reached: “It’s not the model! It’s a failure in the marketplace itself. Players in the market are not rational when it comes to certain things. Hence, there is no market for these items.”
Who is called to shepard the irrational? The steadfast hands of the politicians who in turn hand off their mandates to the bureaucrats. This is the opportunity for collectivism, in the under utilization of the model. Even with the best intentions, a pencil pusher is not a player in the transaction. And this artificial involvement with the pricing system causes the mess. Barriers are erected. Transparency turns opaque and then solid. Consumers are dubious of outcomes and become cynical of efforts.
What President Milei is suggesting is that the underlying components and conceptual structure of markets has not been fully flushed out. Part of the driving force behind decisions are either taken for granted, ignored or simply not significant in a particular transaction. Once people digest how men and women search for meaning, how they are compelled to act on desires for freedom, a better life, and in support for the health and well being of the ones they love- then there will be an understanding. An interpretation of a market failure is the result of the failure to properly identify the players to the transaction, their objectives and how all this plays out.
And then there’s this guy. I’m using his post mainly because he has the best clip of the speech. Yet what he says is interesting as it is so man-of-the-street in its political orientation. If you object to a government intervention then you support fat cat Wall Street types. Sadly, excessive regulation mainly hits small business and the least skilled. They don’t have the capital required to navigate the new rules and regulations. And so, it becomes easier for them to work for others, loosing their freedoms, security and access to property.
Home Economics 