Chronicle of November 2023
Maradona, Messi, and Milei: Is It Argentina's Turnaround Moment?
A Football Powerhouse
Thirty-six years after their latest title as the World Cup champion, the Argentines proved themselves among the best footballers* in the world by winning the 2022 World Cup in Qatar. (*yes, it’s actually called football, not “soccer”)
Diego Maradona's 1986 World Cup performance is celebrated as one of football's finest displays. Scoring five goals and assisting numerous times, he led Argentina, serving as the captain, to a 3-2 victory over West Germany in the final.
Lionel Messi led Argentina to a thrilling 2022 FIFA World Cup victory in a penalty shootout against France, securing his first World Cup triumph and Argentina's title since 1986. As captain, Messi scored seven goals, with four from penalties, and provided three assists.
Short Story on Argentina’s Economy
In today’s world, we know that Argentina has been struggling from crisis to crisis in recent decades. Argentina has defaulted on its international sovereign debt nine times, of which three of them happened in the past two decades. Most recent inflation data in October 2023 showed a shocking 143% year-on-year change in consumer price index. According to Heritage Foundation, Argentina's economic freedom score ranks 144th in the 2023 Index, just below Uganda!2
Argentina was in fact an economic powerhouse between the end of 19th century and the dawn of 20th century. By 1913, Argentina was among the world's 10th wealthiest countries, per capita.
The recipe of that economic powerhouse: Alberdianism, also known as “Argentine Classical Liberalism”. (note: today’s classical liberal in the U.S. is called libertarian to differentiate with left-leaning liberals and progressives. Please refer to: our previous article here). A believer in individual liberty, Juan Bautista Alberdi proposed for commercial freedom, unrestrained industry, and free immigration. Those ideas influenced Argentina’s constitution of 1853.3
“Those who don't believe in freedom as the only way of creation of wealth don't deserve to be free nor know how to be wealthy”
Juan Bautista Alberdi
After great depression, Argentina had some political and economic “experiments” throughout 1930s up to today. From military junta, Peronism, then Kirchnerism. As often times happen in a fascist or socialist countries, beneficiaries of the economic policy are usually: government and ruling-party officials, crony capitalists, and poorest people (welfare receivers), leaving huge disadvantages for middle class and those who dream about upward social-economic mobility.
Milei’s “Radical” Ideas and Challenges
As a proponent of free market and individual liberty, we like Milei’s programs: significantly cut government spending, abolish some ministries/departments of the cabinet and abolish the central bank. Dollarization is a big plus, because to Argentines, USD is a “commodity money”, restricting the government from reckless spending with the support of money printer (the central bank). Not to mention that in contrast with their government, Argentine households and private sector already hold significant amount of USD money at $246 billion, more than 50% of its GDP, and second only to the cash holdings of U.S. citizens.
But, big challenge remains. As a newcomer in political world, Milei’s political party, La Libertad Avanza is just a small party in the parliament. Without political support outside his own party, radical agenda will meet some heavy obstacles. A political party with some (little) similarities in political-economic platform is Juntos por el Cambio, a conservative-leaning organization. The problem is, Cambio as a “big-tent party” seems to be reluctant with radical changes. Thus, it will be interesting to see how Milei can persuade other parties to support his agenda.
Can Milei make a similar impact in the realms of politics and economics as Maradona or Messi did in football, potentially restoring Argentina to its status as a powerhouse in Latin America? We’ll see.
Nonetheless, stock investors have taken positive actions on Argentine stocks. On Monday, November 20, 2023, Argentina X MSCI ETF (ARGT 0.00%↑) gained +11.59% in a single day, following Milei’s win. As of November 30, ARGT has gained a whopping 19.92% since Friday, November 17. The ones who seemed to be unhappy and mislead their readers were mainstream media outlets by writing news titles such as “far right”.
U.S. Stock Market Comeback in November
After 3 months in a row of negative performance, U.S. market delivered a strong comeback in November.
Meanwhile, 5 out of 7 stocks in “Magnificent Seven” outperformed the S&P 500.
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