One of the great successes of the first Trump administration was deregulation.
Wayne Crews, writing in Forbes in September:
In his first term, Donald Trump’s administration technically exceeded its “one-in, two-out” deregulatory goals, claiming net cost savings and regulatory reductions across several federal agencies despite deep resistance and limits inherent in the rulemaking process itself given the Administrative Procedure Act (APA) that governs the regulatory enterprise.
That success has since been reversed and more.
Earlier this year Trump pledged that if elected, he would do more than reverse the reversal by eliminating “a minimum of 10 old regulations for every one regulation.”
Crews looked at how such an effort might go (it’s well worth reading in full) and concludes:
The misbegotten fusions of spending and regulation and of business and government confound free enterprise and capitalism. Any modern free-enterprise-oriented reformer must confront the inertia of hundreds of billions of subsidies and grants-in-aid and the contracting, procurement and acquisitions state behemoth. Beneficiaries of all these like things just the way they are, no matter how much regulation it all spins off. Here’s hoping Trump and Musk, should they get the opportunity, can charter a permanent Office of No to make case against the Administrative State’s market failure premises, and move regulatory disciplines out of Washington and to states, localities, communities, and to the competive realm where the real expertise lies, not just in creating products and services but in developing discipline and appropriate risk management. That’s how to surpass 10-for-one.
And so to Argentina, and the deregulation agenda being pursued by Federico Sturzenegger. He’s the MIT-trained economist and former central banker in charge of the only new ministry established by the country’s President, Javier Milei (who is, impressively, still forging on with his efforts to undo the effects of decades of misgovernment), which is, appropriately, a ministry of deregulation. Mr. Sturzenegger has a lot to do. Argentina stands (if that’s the word) at 145th place on Heritage’s Index of Economic Freedom.
On November 3, the Financial Times published a report by Michael Stott and Ciara Nugent detailing how Sturzenegger, who now has sorted all of Argentina’s “roughly 4,200 laws into three categories: scrap, change or keep,” is getting on. A key problem he faces is, as they note, that Milei’s party, the nascent La Libertad Avanza (LLA), currently has only a small minority in the two houses of Argentina’s bicameral congress. Even with its (sort of) coalition partner, it is still in a minority, meaning that for anything requiring congressional approval, the government has to assemble ad hoc majorities, which has not been an easy process (more on that here), although if Milei’s popularity holds up (it has been remarkably resilient given what Argentina is going through), midterm elections next year may lend a helping hand.
Fortunately for Milei, while Argentina’s governmental structure is modeled on that of the U.S., its presidency is more powerful, somewhat closer to that of France’s. That means, as Stott and Nugent explain, he was able to issue:
a sweeping emergency decree striking down or modifying more than 300 regulations in December. The moves opened the way for him to fulfil his campaign promise by decreeing changes and restructuring the government without needing legislative approval each time.
Milei was able to persuade congress to grant him emergency powers for a year and pass an “omnibus law,” which Stott and Nugent rightly describe as wide-ranging, although it fell short of what Milei had originally asked for.
Nevertheless, as Sturzenegger told the FT:
“This delegation [of power] was extraordinarily broad,” Sturzenegger told the FT. “You can close [government] entities, you can restructure practically any part of the public administration.”
Sturzenegger, an MIT-trained economist, said 15 per cent of Argentina’s laws needed to be scrapped and another 15 per cent modified. The minister has also trained his sights on a thicket of secondary decrees and regulations, many of which he said made no sense for consumers and were holding back the economy. The government has deregulated bus and air travel, simplified divorce, ended rent controls, forced state healthcare providers to prescribe cheaper generic drugs instead of branded ones and made it easier to enforce contracts denominated in US dollars. “Everywhere where we have deregulated there have been significant falls in the real price of goods,” Sturzenegger claimed.
One of the best forms of price control is controlling government.
Stott and Nugent:
Among the most arcane rules the minister has cited as ripe for the axe is a regulation obliging importers to summon a representative of the local company making the same product when they bring the goods into the country. “Argentina is trapped in a Bermuda triangle,” Sturzenegger said, noting its “three vertices” were “the business caste, which has made Argentina the second-most closed [market] in the world”, the unions and the left-leaning Peronist party, which ruled Argentina for most of the 41 years since it returned to democracy in 1983. “I call the Peronist party the Argentine Conservative party,” the minister said. “It’s the party of interest groups, the party which will defend the interests of unions and the interests of big business to the detriment of the population in general.”
As an ideology rooted in corporatism, Peronism is wedded to the notion of a stakeholder society — a society, in many respects, of interest groups, of which government-favored businesses, protected by “industrial policy,” are one. What was Crews saying about “misbegotten fusions” again?
Stott and Nugent:
“The [deregulation] agenda is not just an agenda of freedom,” Sturzenegger said. “We believe that free people trading freely will find the best deals for both sides.”
Well yes.