Refreshing winds of change for the New Year
Voters in Argentina, the Netherlands and New Zealand raise their hands to be heard
We spend a fair amount of time discussing the myriad of challenges we face nationally and the rather desperate state of relations within segments of America. We have written recently about our abdication of global leadership which has led to rising threats to us and our allies around the world. We are therefore heartened today to take note of some faint yet refreshing breezes wafting across the waters from Europe, up from South America, and even across the great Pacific. Green shoots. With every pendulum, there is a moment it exhausts itself in one direction and begins the journey back towards equilibrium. We are hopeful that the very recent national elections in Argentina, Holland and even New Zealand mark such an inflection.
Times seem difficult for people around the world, not just here in America. It is more than just the recent ills beginning with “I”- inflation, interest rates, and illegal immigration. In Europe, whether it be on issues of climate change and fossil fuel abandonment, immigration laws, or the entire relationship between government and its citizens, people have been under stress. Across Central and South America, dictatorships in Venezuela and Nicaragua are setting a tone as broad political winds opposed to the U.S. and more friendly towards China and Iran. These changes among smaller countries are not always voluntary but influenced by money and inducements from abroad. In many of these nations, the ruling class take the spoils and leave the average person with little. As we enter what seems a very contentious election year here, it is heartening to see refreshing green shoots of possible change elsewhere, notably Argentina and the Netherlands.
Rich like an Argentinian
In the first half of the 20th century, Argentina was one of the world’s ten wealthiest countries in per capita income. ‘Rich like an Argentinian’ was a common phrase around 1900. Endowed with fertile farmlands and all climate zones, life was splendid for the upper class who built grand villas and factories. A prodigious exporter of meat, grains, and leather, by the end of World War II, Argentina was far ahead of its neighbor Brazil. She was the most influential country in the region, on par with much of Europe.
Conditions started going downhill with the 1946 election of Juan Peron, who placed the country on a path of centralized control that has continued for much of the past 75 years. Excessive spending, borrowing, money printing, falling currency values and inflation were the lynchpins. The state purchased electric plants, gas plants and the telephone company, launching endless cycles of inefficiency, inflation, and economic busts. The repeated crises culminated in the economic depression of 1998-2002, when the economy shrank by roughly 20%. The country defaulted on its international debt in 2001, and again in 2014 and 2020.
Present-day Argentinians routinely hoard cash dollars, hiding them anywhere and everywhere other than the banking system, where the official U.S. Dollar exchange rate is half the free market rate or less. They often buy houses and cars for cash dollars, knowing the goods will increase in value against the always dropping peso. “The good is worth more than the money next month.” This is exactly the opposite of a stable currency low-inflation regime, where businesses, consumers, and investors can plan and execute more effectively. Endemic inflation (30% or more is the norm there) destroys confidence and distorts behaviors, rendering Argentina one of the most impoverished countries in the region. Young people have been fleeing to Italy, Spain and other realms for better lives. Painful to see.
No more crying for Argentina
Sending shock waves around the world, last month the people of Argentina said “when” and voted for radical change and hope. Faced with a choice for President between the old-line traditional inflationary spending party; and a novice politician, a brash libertarian and trained economist who promises to overturn the tables, to “end a long and sad history of decadence and decline and begin the road to the reconstruction of our country", the people chose B for a new way.
The voting age in Argentina is 16 years of age, and the youth have joined in, helping bring about a revolutionary wave of potential. Javier Milei was sworn in as President on December 10. His rapid rise and decisive (56% of the vote) victory over the establishment candidate is seen as a national howl of pain and repudiation of the ruling class. He is not hunting for small game. At his inaugural, he declared, "Just as the fall of the Berlin Wall marked the end of a tragic era for the world, these elections have marked the turning point in our history." His plans call for the deregulation of markets, the elimination of excess government ministries, and the dollarization of the economy to stabilize inflation and the currency. Return opportunity to the people. This obviously includes developing closer ties to the United States, a welcome departure from recent trends among most of South America.
Of course, Milei will face virulent opposition from his authoritarian neighbors and their benefactors (China and Iran), as he represents a real threat to their further spread of anti-American tentacles in our hemisphere. We wish him well and America should offer him our full support.
Importantly, the key to his victory in the final election was the uniting of all those who oppose the damaging long-term philosophy of the present leadership. Though the opposition was divided themselves, they came together behind Milei to assure the old ways were rejected. An inspiring outcome and perhaps a model for other nations who seek to correct course and unite around that purpose.
The Dutch render an objection
Meanwhile, across the Atlantic, there is also encouraging news. We all recall the Dutch created the first trading post on the tip of Manhattan Island in 1624, naming the colony New Amsterdam in 1626. They’ve been doing business well here ever since. More recently, her people have been struggling with broad European challenges. These include growing immigration from Africa and the Middle East altering demographics and culture, as well as stringent climate mandates impacting energy costs and consumer choices. The final straw seems to have been the 2019 government designation of excess nitrogen as a proximate cause of destructive greenhouse gas-related climate effects.
The use of nitrogen fertilizer is a staple of successful farms worldwide and has contributed much to the ability of the world to feed itself. New stipulations on nitrogen emissions proposed by the Dutch government would lead to reductions in farmable acreage in the country as well as the elimination of much of the dairy and beef herd. Cow flatulence and livestock excrement has been identified as a dangerous source of nitrogen as well. Farmers across the country revolted in 2019, and now faced with higher food prices and the prospect for more, the people are alarmed.
As the pendulum begins to swing back, the Dutch have also risen to be heard. In the words of the New York Times, “The Netherlands, long regarded as one of Europe’s most socially liberal countries, woke up to a drastically changed political landscape on Thursday after a far-right party swept national elections in a result that has reverberated throughout Europe.
Geert Wilders’s Party for Freedom, which advocates banning the Quran, closing Islamic schools and entirely halting the acceptance of asylum seekers, won 37 seats in the 150-seat House of Representatives, making it by far the biggest party, in a clear rebuke of the country’s political establishment.”
Wilders is not assured of being Prime Minister, and just as with President Milei in Argentina, he will face vilification and full force attacks from the existing power structures. Moderates of the middle worldwide have dug themselves a big hole this last decade, here and abroad, but it appears at last the problems have been identified and might be in the initial stages of redress. Green shoots of new life, a pendulum on its journey back to equilibrium? May we follow that path of recovery as well.