94Ha Viewpoint
South America’s economic model is about to undergo a major and fundamental reversal, which will profoundly affect and change South America’s system and culture.
In the past year, many major events have occurred that will affect the world for decades to come. Just as all the haze will dissipate, the sun will eventually shine through the clouds. Let us first review the past one by one, and then look forward to the future with optimism.
Looking at the future from an economic perspective. Although the global economy is still in cyclical adjustment and faces many challenges, the drastic reforms of Argentine President Milley in the past year since he took office are undoubtedly amazing. Not only did he quickly achieve fiscal surplus and strong economic growth in Argentina, which was on the verge of collapse, but Milley’s Austrian economic thinking and governance philosophy are even more exciting, making Argentina very likely to become the first country to break the South American curse. Before Milley came to power in December 2023, 57% of Argentina’s 47 million people were suffering from poverty, and the annual inflation rate exceeded 212%.
South America’s resources are far superior to those of the North American continent, and after being colonized by Spain and Portugal, it was once regarded by Western scholars as a sub-civilization of Western civilization. However, as Huntington said, “Although Latin American civilization is the descendant of European civilization, it has evolved along a path very different from that of Europe and North America. It has a corporatist and authoritarian culture.” In the eyes of many people, it is this unique culture and national character that has led to all kinds of chaos in South America and the so-called middle-income trap. In my opinion, in fact, there is no so-called middle-income trap or curse. There are only the dominant ideas of the regulated economy or anti-market economy, and the system and culture that do not respect private property and personal freedom and rights. This is the curse and trap that restricts the development of South America and the shackles that bind the people of South America.
The stormy reforms after Milley came to power are cutting into these chaos. He comprehensively relaxed the government’s various controls on society and the people. So far, the Milley government has abolished and revised 672 laws and regulations that regulate the economy, about half of which have been completely abolished and the other half have been significantly revised. The reforms had an immediate effect. For example, after the cancellation of the Import License, clothing prices immediately dropped by 20%, home appliance prices dropped by 35%, and after the abolition of the Rental Law, the supply of apartments in the capital tripled, and the price dropped by about 50%.
He reduced the number of government departments from 18 to nine, reduced subsidies for energy and transportation, stopped bidding for new public works, and fired 70,000 redundant government officials. As he recently said when reviewing his first year in office: “We are eliminating inflation, thereby eliminating relative price distortions, which will facilitate capital accumulation. We are reducing taxes, we have carried out 800 structural reforms, and we are removing regulations every day.” Mile plans to more firmly promote the “Deep Chainsaw” plan of more than 3,000 reforms in 2025 to carry out a package of political, security and fiscal reforms, including deepening labor and pension reforms, promoting privatization and abolishing 90% of the current national taxes. According to the International Monetary Fund, Argentina’s economy will completely get rid of recession in 2025, achieving a growth of 5% to 6%, and the inflation rate will further decline.
This undoubtedly means that South America’s economic model will undergo a major and fundamental reversal, which will profoundly affect and change South America’s institutions and culture.
The Russian economy will collapse completely in 2025
The 2024 Nobel Prize in Economics was awarded to three American institutional economists in recognition of their outstanding contributions to the study of how institutions are formed and affect economic prosperity. In my opinion, the person who deserves this honor is none other than Mile. Judging from his unparalleled reform achievements in the first year of his presidency and the profound impact they have had, I think he is the most qualified to win the Nobel Peace Prize. Because he single-handedly changed Argentina, which had been trapped in trouble for nearly a hundred years, and laid a solid foundation for South America to get out of the curse. I hope and sincerely wish that he can be awarded these two awards, because this is well deserved.
Secondly, look at the future from the perspective of international politics. The Russian-Ukrainian war is about to end its third year. If we put aside values and international law and only evaluate it from an objective reality, this war has caused Russia to suffer heavy casualties, completely exhausted its resources and will inevitably be defeated. If this continues, The Economist predicts that the Russian economy will collapse completely in 2025; in addition, Russia’s geopolitical influence will also quickly disintegrate, causing many countries that have been on the sidelines and neutral to stay away from Russia. It goes without saying that war-torn Ukraine has completely turned to the West. Even countries that were originally pro-Russian, such as Georgia, Serbia and Slovakia, have recently launched large-scale demonstrations, shouting slogans of staying away from Russia and joining the European Union.
Russia has accumulated influence in the political and military fields of the Middle East for generations, but it has also been uprooted with the elimination of Hamas, the crippling of Hezbollah in Lebanon, and the fall of the Assad regime in Syria this year. What is more worrying is that Russia’s internal affairs are likely to be deeply turbulent and even fragmented in the next two or three decades. In a nutshell, Putin is losing Russia’s future.
Looking at the future from technology. The creation that will shine in the human sky in 2024 is undoubtedly the rapid development of new technologies represented by artificial intelligence. Humanity has undoubtedly entered a new era of artificial intelligence. Although the risks of losing control and the ethical challenges it brings cannot be underestimated, just as humans cannot reject modernization, they cannot reject the destined era of artificial intelligence. Let us pray for world peace, economic prosperity, and technology that benefits mankind in 2025!
