87 Comments

#5 shouldn’t be such a surprise. We have previous examples in Chile and Peru. The next step in Argentina would be to codify some of these free market reforms -particularly central bank independence- to the constitution. But Id say this is just mainsrream economics . At the level of missmanagement Argentina experienced, there really isnt much difference between what Hayek or Milton Friedman or Larry Summers would do. Macroeconomic chaos has a big economic cost and also a big social cost. In Peru we have shared memories of going to the markets in the late 80s with parents and siblings so we could each grab two cans of milk due to rationing. Getting past this state of distopic normalcy and movimg onto a new normal injects a dose of positive emotions that fuel the economy. So yes, it is reasonable to see a short term shock that is relatively quickly overcome by an inflow of private investment and returns of expatriated capitals. After experiencing life under healthier macroeconomics, voters will have been vaccinated against irresponsible macro policy (although this is Argentina…so who knows). Eventually, there should be a leadership transition from a bulldozer type president that is focused on demolishing old institutions to a more centrist political class that will build uppn and manage the new statu quo. We have lived this before in Chile and Peru, so this shouldnt come as a big surprise. I will revisit this comment in a few years to check how well it aged. Argentina is second to none in drama so we will all have to wait and see..

Expand full comment

One thought I had was that indeed other types of deficits (ex. social services, infrastructure, environmental conditions, population health, sub-national fiscal health) are slower to manifest after a fiscal shock so yes it seems early to make any big judgements on this particular program.

Canada for example imo is still seeing some negative repercussions from its austerity in the 90s but no one makes the connection.

Expand full comment

As for infrastructure, Milei just continued some existing projects, the rest (as well as new projects) would be handled by public-private partnerships (so private sector could handle the construction of roads, bridges and airports though).

Also, an unrelated note but the austerity program that Canada conducted in 1990s was the example that Liz Truss and fellow Conservative members in the UK noted in their book "Britannia Unchained", as a prescription for Britain's slow economic growth. Too bad that they are too dogmatic in their ideas of small government, otherwise they might want to mention Bill Clinton's programs or the ones conducted in Australia in the same period!

Expand full comment

Except that didn't Canada's austerity program succeed by helping Canada export its way to prosperity?

Britain would be unlikely to be able to do the same, given a financial setup unfriendly to manufacturing, competition from Asian countries with massively lower wages, and a lack of natural resources (due to being both densely populated and the country which gave the Industrial Revolution to the world).

Expand full comment

Yeah, joining NAFTA is a great boost for the development of Canadian economy though.

As for Britain, apparently Brexit advocates thought that the formula to boost British growth is:

- Getting out of EU (to remove itself from rules and regulations that EU sets up - you might remember the quote that "US innovates, China replicates, EU regulates")

- Create a bunch of freeports and tax havens afterwards (to replicate the success of Singapore or Hong Kong, as well as develop the financial sector)

- Signing free trade deals with the US and many other countries (even integrate more with old dominions of the British Empire (Canada, Australia and NZ).

Now, if the negotiations for Brexit finished earlier, as well as a free trade agreement signed by Trump and BoJo, then losing the EU market might just be small problems; but since Trump and Starmer don't have any common bonds to each other + too long negotiations post-Brexit + Britain being shafted by other trade partners, I don't believe that Starmer could change anything for British growth though. I am thinking that Reform might even have a serious chance in joining government next election, especially with Elon's funding!

Expand full comment

I live in the UK myself, and voted Remain in 2016, even though I'm not much a fan of the EU itself: I once described myself as a "Vernunftbrexitgegner" (by analogy with the "Vernunftrepublikaner" of Weimar Germany).

I certainly get the impression that the right-wing Brexiteers sought to make the UK a tax haven, but there was no way such a model was going to bring prosperity to a country the UK's size! Tax havens are perforce parasitic on other (much larger) economies, and the largest economy that could perhaps be described as a tax haven is Switzerland. Switzerland's population is less than 9 million people, while the UK's is well north of 65 million now.

The "Singapore on Thames" metaphor is apt: while such a model could conceivably bring great prosperity to London it would mean writing off the rest of the UK. Ironic given that London voted 60% Remain, and support for Brexit in provincial England was widely driven by despair at the demise of its nationally-focussed post-WWII economy (the "British Nation" of David Edgerton).

The UK really needs to move closer to Europe again: maybe it should go for an EEA/EFTA setup like Norway or Iceland? That would enable it to benefit from the EEA regulatory union with the EU, while retaining CPTPP and any other free trade deals it may sign in its own right.

Expand full comment

I truly wish the Argentines well. Back in the 70s in college I wrote a term paper in which I asserted that the fate of worldwide economics could be judged by the performance of three countries: Poland (then communist, but I was pretty sure that wouldn't last), India, and Argentina. I think the thesis has held up surprisingly well despite the sophomoric logic behind it at the time. Poland has done very well. India appears to be in a good place. Argentina is the last piece of the puzzle.

BTW: I love the final sentence: "Argentina is second to none in drama...."

Expand full comment

Yeah, even though an economy based on agriculture could not be prosper in the long term (unless if you are NZ), the weirdest problem with Argentina is why that country never got serious in stable development, instead having a great boom-bust cycle with high level of inflation (or debt default) each time its economy busted though!

Expand full comment

My wife and I are finally going to visit Argentina this spring. Mostly to see Patagonia, but we will spend a week in Buenos Aries and another in Mendoza region, so I look forward to what the locals have to say about the Milei effort. Just checking now, and the "blue" market versus official rate are within 10% of each other, so this "rich" gringo won't mind getting a less good rate at the ATM. I understand they passed a law (not sure if pre or post Milei) that requires CC transactions to be at the "blue" (most favorable) rate. And even at 10% difference, it seems to me the arbitragers would be all over buying dollars at the bank rate, and selling them at the blue rate. I must be not understanding something.

Expand full comment

I have found Argentines to not be completely rational from an economic perspective.

For example, in Buenos Aires in 2002 I had to pay a 20 peso taxicab fare when exchange rate was officially 1 to 1 but two days before an announced 25% devaluation. I offered to pay either the required 20 pesos or 19 US dollars, the taxi driver chose the pesos "since the devaluation is still 2 days away".

Expand full comment

Get ready for very high prices, especially in Patagonia.

I just spent 40 days in the Chilean Patagonia and have been 12 days in the Argentinian Patagonia and the price difference is staggering.

Expand full comment

It’d be great if someone somewhere did a piece on how cyber security works and why it’s so difficult to get all companies (small, mid, large) to take it seriously (dump money into it). MNCs resist top down regulations so the government is relegated to issuing guidance by EO. Proposals are often shot down because they duplicate rules, are too broad, etc etc.

And then people have the audacity to blame the government for the failure? Do these mammoth telcos not understand the myriad vectors of attack? Do they have any shame? Why don’t we just do two things:

- breaches must be reported within 72 hours to government

- compromised data will cause companies to incur fees/penalties/civil litigation

If we can’t do top down then we have to find an incentive to get all private actors to take it seriously.

Expand full comment

There’s an interesting book by Fred Kaplan on this called Dark Territory: The Secret History of Cyber War. A bit older but holds up I think.

One of my favorite stories is around when they finally convince a general to install a machine that actually detects and records cyber attacks. His response after a few days is “we’ve been getting attacked every day since we installed your machine.”

Expand full comment

The telcos hate investing in the management side of the network. It doesn't drive sales. I've heard some truly ridiculous tales of cobbled together nonsense in the networks of very big telcos. I agree that it will probably take the state wagging carrots and sticks at then to get them to change.

Expand full comment

The perceived ROI isn't there - it's likely cheaper/easier for them to pay off the ransoms and not report. It doesn't drive revenue - it's an operational cost probably located under "support services" where capex often doesn't get prioritized. I believe you wholeheartedly.

Expand full comment

It should be a felony for municipalities and public corporations to pay ransoms to hackers in order to recover data. If ransomware attacks on large organizations weren't profitable, there would be a lot less of them.

Expand full comment

Isn't outlawing cryptocurrency the simplest way to make it impossible for ransomware extortionists to make a profit?

Expand full comment

The WSJ is reporting that this breach was able to hit them all because it went in via US government surveillance backdoors (CALEA).

This has been flagged for many years by people in the industry and always ignored, even when Snowden made the same argument in a high profile way: telco networks are only as secure as the government backdoors that are mandated to be placed in it. And those backdoors are government, not private, so they aren't secure at all.

Expand full comment

Charlie Munger said it best:

“I’m not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people do who are supporting it. I think only when I reach that stage am I qualified to speak.”

Expand full comment

Ideology muddles the brain. Clearly understanding contrary viewpoints, without emotion or preconceived opinion, leads to wisdom. We all need to step back, listen and learn from each other. Neither the hard left, nor the hard right, will guide us to the promised land.

Expand full comment

Dogmatism is the enemy, I think

Expand full comment

I would like to see Noah write another piece on the new evidence of serious climate tipping points, including the permafrost becoming a net emitter and the downward trend in cloud formation. It seems like these are going to be major near term threats to any abundance agenda, particularly one based on shale drilling.

Expand full comment

Shale drilling is better than all the coal be mined in Australia being used for power generation and steel making in China and India. In fact, it may be a good idea to drill the permafrost areas also to be able to use that methane for productive uses (like replacing coal) rather than to let it escape in the atmosphere.

As for cloud cover, some recent changes may be due to reduction in sulfur from transoceanic shipping due to changes in fuel standards, so are more of a return to normal. Research into injection of salt water into clouds to increase their albedo, or actual sulfur injection to the stratosphere are techniques that could help reduce warming.

In any case, tipping points are a call for more abundance of clean energy, including nuclear and geothermal, not a call to forego abundance.

Expand full comment

What new evidence? People have been claiming there are tipping points for years, largely to work around the fact that there's no evidence of any climate related problems occurring currently (all such claims fall apart on close inspection).

Given that no such tipping points have been unambiguously crossed, all new "evidence" must be modelling. But models from climate professors are always terrible, so that's not evidence of anything.

Expand full comment

Claiming that there is new “evidence” of tipping points, is indeed disingenuous. So is claiming that the idea of tipping points is a “work-around” for inadequate catastrophe.

Expand full comment

If it's disingenuous, show how. There is no real world evidence for climate tipping points, and lots of evidence against. For instance, the fact that in the past it has been much warmer than it is now. If there were such tipping points they'd have been activated back then and we'd be living in a much warmer planet than we are.

Expand full comment

Nothing you are claiming here supports your “disingenuous“ position that “tipping points” are an intentional distraction to hide a lack of evidence. If you have any evidence, feel free to share it. As far as I know, the first mention of a tipping points was in sci-fi( much like the first mention of space travel and robots and AI). Coincidentally, the earliest tipping point proposals I’ve seen involved it tipping back to colder.

Expand full comment

First mention of climate tipping points being sci-fi? But we're talking about the stuff that's presented as real, right?

Tipping points are a constant feature of climatological claims dating back to the start of the field, back when they were warning the world was heading for a global cooling disaster that would depopulate the United States and create a new ice age, so that's why the earliest tipping point talk is about cooling.

The reasons they keep coming up with these ideas is not because any genuinely robust science points to them. The fact that so many such claims have been invalidated, no such tipping points were ever crossed, and the predictions always fall apart on close inspection (e.g. ultra wide CIs) is good evidence of the pseudo-scientific nature of tipping point discourse.

We know they don't come up because of science, so why do they come up? There's very few explanations possible after ruling out the non-disingenuous ones. The best explanation is simply that it lets them dodge the problem of real world data not showing any kind of problem.

Expand full comment

The Republicans seem to have their own "abundance" vs. "power" thing going on, as evidenced by the whole H1b thing. The MAGA right wants to push their unpopular culture war crap on everyone while the progressive left is still pushing hippie Che Guevara stuff from the sixties. My prediction is eventually the tech bros and the abundance left come together for some sort of pro-capitalism third party, roughly along the lines of #5 but more like a libertarian-lite "conscious capitalism" growth-with-guardrails agenda. At least that's what I hope, because I think it would be a good thing.

Expand full comment

"The MAGA right wants to push their unpopular culture war crap on everyone while the progressive left is still pushing hippie Che Guevara stuff from the sixties."

Very well-said, and exactly correct.

Expand full comment

Unpopular culture wars come from the left. The MAGA right want to end it, and they were clearly elected on that basis. The problem is for Musk: Trump didn't run as a libertarian pro-skilled-immigration president, so trying to recast him as such is inevitably going to cause tensions with the base that heard nothing about that on the campaign trail.

Expand full comment

I have some comments for you about Milei's current work:

1. The stability program that Milei conducted was actually pretty a run-on-the-mill shock therapy, similar to Balcerowicz in Poland after the collapse of communism (deregulation, more free trade, reduce public spending, etc. ) The architects behind these programs (Caputo and Stuzenegger) are old guards from previous non-Peronist governments, though Milei also joined in this process (there is a tweet from Ivan Carrino about Milei's plans from 10 years ago: https://x.com/ivancarrino/status/1869180038505218098)

2. Even though he reduced public spending, welfare for poorest people actually increases higher than inflation (he just cut the middleman). As such the chance that Milei's reform might stick in the long term is higher than Menem's (apart from failed pegs, Menem government was characterized by high unemployment, social spending lower than current day). Unfortunately the retirees ended up being shafted by his cut (though he explained that children poverty rate was higher than seniors), and education as well (the government did not even buy airplane tickets for the national team for International Maths Olympiad, and the team needed private sponsors to join the competition). You could check this tweet in Spanish by the vice-president of Argentina: https://x.com/VickyVillarruel/status/1805313994162586024

3. Latest poverty data shows that Milei has reduced poverty in Argentina to lower than before coming to office; and monthly inflation rate (from a private consultant) could be even lower than 1% this December: https://x.com/ipconlinebb/status/1873358785387057236

Expand full comment

Also, about education spending cuts, there could be a valid justification that without it, many other sectors would reject cuts as well, and Argentina might even end up at hyperinflation or default (which is what happened in 2001, when Ricardo Lopez Murphy proposed austerity measures, but was rebuked by unions and had to resign, and the default next year basically reduce purchasing power of the budget to 1/3).

Expand full comment

what a strange, unbalanced-feeling dichotomy in "abundance" vs. "power" - " the “power” faction thinks that the key question is who controls the Democratic party. " - This assigns a tangible, socially good goal to the "abundance" faction (produce more things for Americans) but fails to do so for the "power" faction, when they obviously do have a socially good goal, which is equity and justice for all Americans, this is very skewed terminology. Doesn't the "abundance" faction seek to control the Democratic party as well? I would suggest a better pair of terms would be "abundance" and "justice", to at least assign to what you refer to the "losing" faction an actual social good, since they definitely do have one, one which they also feel if it were ever truly embraced by a de-corporatized Democratic party, would win elections up and down the ballot. That's of course on their side to prove, but at least give them the dignity of their actual position.

Expand full comment

I respect your argument. However, "equity" and "justice" are subjective words, difficult to define, charged with emotion, clearly a matter of opinion. Beauty is in the eye of the beholder, as are equity and justice.

Expand full comment

you can make the same arguments for "abundance", "abundance" for whom, and of what? at the expense of who else? For the emotionalism of "power", look no further than the flashy POWER labeling on your average lawnmower or kids toy. None of these words are inherently "emotional" without context else we'd hardly have a Justice Department or invest in equity funds lest these terms are too "charged with emotion".

if you read the linked article it's clear that the concerns the left has with the "abundance" movement, given its particular context here which is that private interests would be freed and encouraged to provide more goods and services, is that it will entail deregulation that will hurt poor people. Directly, that these "abundance-skeptics" would seek solutions that are more guaranteed to be "equitable" and "just". The context gives the labels their definition.

Expand full comment

Providing more goods and services benefits everyone by making them cheaper, and deregulation (like not stalling permitting transmission lines to bring more electricity based on needlessly complex environmental impact statements that take decades to complete) doesn’t necessarily hurt poor people ( most environmental lawsuits are from rich people that don’t want their property values to decrease) but help poor people living in cities by making electricity cheaper. As the Millei experience in Argentina shows, reducing regulation can help the economy and reduce poverty and inflation.

Expand full comment

Common stock equity is the remainder interest in a business, after all creditors and debtholders, relatively easy to define. Justice is administered by our court system, usually based on legal principles and the laws passed by legislatures, mostly factual.

Social "equity" and social "justice" are vague inchoate words, subject to a wide range of interpretations. For example, how many months of each year's work must I devote solely to pay taxes to government? Three months, four months, five months, six months, or more? I suggest we might disagree.

If living standards for the poor in America are much higher than most other countries, how high should the standards be, and who should pay the costs in what proportion? How much personal responsibility do we have to manage our own lives? What are the moral hazards we should consider? There are many trade-offs to consider.

How much cost is involved to tear down and rebuild freeways dividing minority neighborhoods? Is this the most sensible use of taxpayer dollars. The questions are almost endless.

Social equity and social justice are words intended to stir emotions. Abundance too, but in a more quantifiable way which recognizes that trade-offs are necessary.

Expand full comment

OK so Noah's terminology is exactly accurate:

1. what does the "abundance" faction want? "abundance" - more housing, more goods, more stuff. policies that would enable more of this to happen.

2. What does the "power" faction want? "power" - control of the Democratic party. no actual policy goals, since "power" is not a policy. they have no policy.

That's a fair set of terms for you, OK ! describes both sides very fairly and evenly as anyone can see. happy new year

Expand full comment

You have made reasonable criticisms and objections to the language used to differentiate the two factions. I don't disagree with you; I believe that you have made valid points.

I only ask you to consider that "equity" and "justice" in this context are emotionally loaded words which are purely a matter of opinion. Abundance means higher living standards in general, easier to define, more understandable. And, in my opinion, some "social justice" ideas will prove to be counterproductive in practice as implemented. For example, we don't need ten years of environmental studies to expand the grid, or approve a natural gas pipeline.

Expand full comment

FYI I'm pretty sure Stewart Reed is a bot

Expand full comment

The excerpt he posted from The Prospect was just complaints about the abundance faction being supported by Google, a16z, and the Kochtopus, how is that appropriately labeled justice instead of power?

Expand full comment

I am not bothered by China's surveillance of me because they don't really have any power over me. I am very worried about the US government. And as long as the US government keeps collecting the data, of course China is going to try to hack into it. The only way to stop this is to shut down domestic mass surveillance.

Expand full comment

Oh such vanity. As if anyone cares about you or what you do.

Expand full comment

You are defusing a serious concern with a poorly considered wisecrack.

The problem is not that nosy people are gossiping about your taste in music or your flatulence or your junk food addiction.

Rather, it's that most people have things that can be turned against them. Maybe something as innocent as valuing a pet dog more than life itself. Maybe a sexual indiscretion. Maybe a long hidden lie.

And although they might not commit murder to address a threat on this subject, they might very well be willing to perform some small "favor" -- or agree to neglect some responsibility, in order to maintain things.

It's not enough to claim that "I wouldn't give in to such blackmail." Your neighbor or county health officer or police officer might.

It's a bad business to allow powerful entities to collect massive information on massive numbers of citizens, all the more so in an age when this information can be stored and accessed efficiently.

Perhaps there is no effective means of stopping this. But trivializing the problem as personal vanity is not helpful.

Expand full comment

If the worry is that individuals with the ability to do small “favors” is the concern about surveillance, then the original poster should be just as worried about China as the US doing the surveillance. If you work as a janitor at a reservoir, there are few favors you could do that benefit the feds, but several you could do that could benefit our adversaries.

Expand full comment

Reply to this comment with your email address and password then

Expand full comment

If I were a US policymaker trying to keep defense-critical industries onshore, which ones should I be focusing on? Some things are obvious: ammunition and explosives, shipbuilding, aviation, battery manufacturing for drones, semiconductors.

But all of these things have extremely complicated supply chains and it's hard to know what's critical. What are the seldom-thought-of sprockets for want of which we'd lose a war?

Expand full comment

We have a lead on jet engines which China is not good at making. We also, thanks to SpaceX have the highest productivity in satellite manufacturing and orbital insertion which we should keep. AI is important as Anduril Industries is showing, but China maybe catching up based on the recent DeepSeek.com efficiency breakthrough, so we need to work to stay ahead.

Expand full comment

Seems like a great question for Noah to dive into.

Expand full comment

I’d read that post!

Expand full comment

Looking forward to your investigation of US manufacturing. I would have thought all the IRA investment might have turned things around at least a bit...

Expand full comment

I would also like a deeper dive on this, including the decline of small manufacturers that supply the major ones. There are some very small machine shops now, like the ones common in Japan, which can make good profits by taking advantage of more automated production tools and doing small orders, like this guy who got $88,000 in revenue over 6 months making $25,000 profit by doing his own work in a rented garage.

https://youtu.be/1ih5c0v2ido?si=M-UqXNOmFRJseGfT

Expand full comment

Not all of those abundance groups are created equal and it's a bit disingenuous to make a blanket. "Support all of them."

It's one thing to say "Union support isn't a precondition of permitting reform" and another to say "We will use permitting reform to destroy unions".

Expand full comment

Which abundance groups have a stated goal of destroying unions? Not that there’s anything wrong with that, but I think the goal is to have actual abundance, not just get rid of those standing in the way.

Expand full comment

I'm no fan of China, but I think you over estimate its threat and under estimate the vulnerability of everything in 0s and 1s. If someone wants to read your email and texts or listen in on your phone calls, they will. And have been able to for a long time. That's a fact of life. No matter what the govt does to protect us, I think we'll still have to assume our communications are far from secure.

Expand full comment

If government and industry are talking about sensitive information over a cell network instead of using an end to end encrypted app like signal they are engaging in risky behavior. And the fact that encrypted email is still rarely used is a big failure for society.

Expand full comment

Emails are pretty secure, though E2E encrypted messengers are the most secure. SMS and phone calls are just especially insecure.

Expand full comment

Devil’s advocate:

The USIC can read my emails any time it feels like it.

The only protection I have against that is whatever restrictions exist in the (secret) Five Eyes agreement. If I were a citizen of a country not in that group, there are effectively no restrictions at all, and no recourse.

Whaf’s the difference?

(I’m fully aware that there is a difference, but would like somebody to try and articulate what it is…)

Expand full comment

Anyone can read your emails, they are as secure as a postcard in that the plain text is stored on multiple random computers as they are routed to the recipient. Phone calls are slightly more secure but can be intercepted by local intelligence agencies as well as hackers who infiltrate the telcos.

The Five Eyes agreements evade restrictions on the USIC to spy on Americans by having the Australians or British do it in exchange for the US spying on their citizens, but in the US, citizens have more protections and can’t have their homes raided and be jailed for mean tweets as they can in the UK or more severely in the PRC.

Expand full comment

Maybe SMTP-based email is itself obsolete and needs to be replaced with a new open protocol in which every message is signed (thus making spam far easier to control) and encrypted end-to-end (ie that the message plaintext is never stored anywhere)?

Encrypting data-in-transit isn't particularly useful given that most data breaches involve data-in-use or data-at-rest.

Expand full comment

Abundance liberalism is great. But not if it is going to get captured by the same old profit maximizing BigTech/Healthcare Insurance/Banking monopolies that have successfully lobbied to have ever increasing profit margins and ever worse living standards for the vast majority of Americans.

Expand full comment

Milei said pretty clearly during his campaign and early in his governance that most of his policies were not actually libertarian because they couldn’t get broad support. Instead, he seems to following a pragmatic free market approach.

Expand full comment

Yeah, some radical libertarian economists (like Emilio Ocampo or Roberto Cachanovsky) did not end up in Milei's cabinet, and more mainstream right-wing leaders (like Caputo or Sturzenegger) hold important positions in the decision-making process. However libertarians still hold quite a lot of influences in Milei's party and government, with MPs like Jose Luis Espert or Bertie Benegas Lynch (son of a libertarian economist).

Expand full comment